California Silenced No More Act limits privacy of settlement

California Governor Gavin Newsom recently enacted the “Silenced No More Act” (SB 331 or the “Act”), which extends the limits of confidentiality provisions in settlement agreements for claims filed, previously applicable only regulations related to sexual harassment and other allegations of gender discrimination. The Law, which will come into force on January 1, 2022, will now apply to employment contracts related to all forms of harassment and discrimination in the workplace, not just those based on sex, including but not limited to harassment and discrimination based on race, religion, color, national origin , disability and gender. The law further prohibits the use of non-denigration clauses in separation agreements, effective January 1, 2022.

Expanded ban on nondisclosure clauses in settlement agreements

In 2019, California legislation entry into force which prevented employers from imposing non-disclosure agreements (NDAs) as a condition of settling a civil or administrative action in which allegations of sexual harassment or gender discrimination had been raised. The law extends these restrictions to complaints of harassment and discrimination based on any protected feature which have been invoked in a civil or administrative complaint.

As before, nondisclosure agreements are permitted when it is an employee’s preference, and provisions to protect the identity of a requester remain permitted when requested by the requester. In addition, settlement agreements may still incorporate provisions that prevent the disclosure of amounts paid to resolve a case, as well as confidentiality clauses related to claims that are threatened or not yet filed with a court or administrative body.

Non-denigration clauses in employment contracts

The law further provides that employers cannot require employees, in exchange for a raise or bonus, or as a condition of employment or continued employment, to sign a non-denigration clause. or other words that deny “the employee’s right to disclose information about illegal acts in the workplace.”[1] Such provisions may however be included in this legal disclaimer: “Nothing in this agreement prevents you from discussing or disclosing information about illegal acts in the workplace, such as harassment or discrimination or any other matter. other behavior that you have reason to believe is illegal. “This ban will apply broadly to any employment contract that contains a covered clause, including letters of offer.

New requirements for separation agreements

In addition to the NDA restrictions, all agreements related to an employee’s separation (including standard separation agreements) in California may not include language that denies “the employee the right to disclose information about deeds.” illegal in the workplace ”. However, separation agreements may include a nondisclosure or nondisclosure clause that limits an employee’s ability to disclose information relating to working conditions, provided it is accompanied by the same disclaimer. -responsibility, mentioned above, protecting the right to report illegal acts. At work.

The law also requires California employers to (i) notify employees of their right to consult a lawyer regarding any separation agreement, and (ii) allow at least five working days for employees to do so. Employees can choose to sign the agreement before the end of the five-day waiting period, provided that the employee’s decision to shorten the review period is deliberate and voluntary, and not induced by fraud, a false statement, threats or even heightened inducements (eg, a threat to withdraw or modify the offer, or a promise to provide different terms for those who sign earlier).

Negotiated settlement agreements[2] who resolve a complaint filed by an employee in court, before an administrative body, in another dispute resolution forum or through an internal complaint process of an employer are not affected by the Act.

Employers can always include non-disclosure language regarding any amount paid under a separation agreement. In addition, the Act does not prohibit an employer from protecting his trade secrets, proprietary information or confidential information that does not involve illegal acts in the workplace.

What California Employers Should Do Now

California employers must act quickly to ensure compliance with the law, which comes into effect January 1, 2022. Specifically, employers must:

  • review their model agreements to verify compliance with the expanded requirements of the Act;

  • include legally required disclaimers in employment contracts (including letters of offer and confidentiality agreements) and separation agreements that include nondisclosure or non-disparagement clauses; and

  • ensure that the separation agreement templates include the required five working day review period and reflect the employee’s right to consult a lawyer.



[1] “Information about illegal acts in the workplace” includes, without limitation, information relating to harassment or discrimination or any other behavior that the employee has reasonable grounds to believe to be illegal.

[2] “Negotiated” means that the agreement is voluntary, deliberate and informed; the agreement provides for valuable consideration for the employee; and the employee is given notice and the opportunity to retain the services of a lawyer or is represented by a lawyer.

© 2021 Epstein Becker & Green, PC All rights reserved.Revue nationale de droit, volume XI, number 323

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