October 22, 2021

Governor Newsom recently signed Senate Bill 331 into law. The new law, called the Silenced No More Act, builds upon the 2018 law, Stand Against Non-Disclosures (STAND) Act, which was enacted in response to the #MeToo movement and prohibited non-disclosure clauses in settlement agreements involving workplace discrimination, retaliation, or harassment based on sex. Senate Bill 331 will prohibit non-disclosure clauses in settlement agreements involving workplace discrimination, retaliation, or harassment on any protected basis under the California Fair Employment and Housing Act (FEHA) – not just sex – for settlement agreements entered into on or after January 1, 2022.

Senate Bill 331 amends California Civil Code section 1001, to prohibit confidentiality provisions in settlement agreements for all acts of workplace harassment or discrimination, failure to prevent an act of workplace harassment or discrimination, or an act of retaliation against a person for reporting or opposing harassment or discrimination, based on any of the protected bases under the FEHA. These protected categories include race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or veteran or military status. It is important to keep in mind that this statute (Civil Code section 1001) only applies to provisions within settlement agreements that prevent or restrict the disclosure of factual information related to a claim filed in a civil action or a complaint filed in an administrative action.

In addition to prohibiting non-disclosure clauses in settlement agreements, Senate Bill 331 also prohibits non-disparagement clauses in employment agreements and severance agreements. The Act amends California Government Code section 12964.5, which prohibits non-disparagement agreements as a condition of employment or continued employment (or in exchange for a raise or bonus) which deny the employee the right to disclose information about unlawful acts in the workplace. Under the amended law, a non-disparagement or other contractual provision that restricts an employee’s ability to disclose information related to conditions in the workplace shall include, in substantial form, the following language: “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.” Any agreement or document in violation of this subdivision is contrary to public policy and shall be unenforceable.

The amended Government Code section 12964.5 also has a new section relating to severance/separation agreements, similarly prohibiting provisions that prohibit disclosure of information about unlawful acts in the workplace, and requiring non-disparagement or other contractual provisions that restrict an employee’s ability to disclose information related to conditions in the workplace to include, in substantial form, the following language: “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.” Any provision that violates this is against public policy and shall be unenforceable.

An employer offering an employee or former employee an agreement related to that employee’s separation from employment must also notify the employee that the employee has a right to consult an attorney regarding the agreement and shall provide the employee with a reasonable time period of not less than five business days in which to do so. An employee may sign such an agreement prior to the end of the reasonable time period as long as the employee’s decision to accept such shortening of time is knowing and voluntary and is not induced by the employer through fraud, misrepresentation, or a threat to withdraw or alter the offer prior to the expiration of the reasonable time period, or by providing different terms to employees who sign such an agreement prior to the expiration of such time period. Confidentiality of the severance amount remains allowed, and employers are still allowed to protect their trade secrets, proprietary information, or confidential information that does not involve unlawful acts in the workplace.

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This article is based on the law as of the date posted at the top of the article. This article does not constitute the provision of legal advice, and does not by itself create an attorney-client relationship with Eskridge Law.