Expansive restrictions on non-disclosure provisions in settlement and severance agreements.
Effective January 1, 2022, Senate Bill (SB) 331 will prohibit settlement agreements that prevent or restrict an employee from disclosing factual information related to the employee’s claims of sexual assault, harassment, discrimination, or retaliation. A settlement agreement that contains a provision that prevents or restricts an employee from disclosing factual information related to such a claim of sexual assault, harassment, discrimination, or retaliation is void as a matter of law and will be unenforceable. These restrictions apply to settlement of complaints filed in court or with an administrative agency. This law allows employers to prohibit the disclosure of the amount paid to settle a such a claim.
Effective January 1, 2022, this law also prohibits severance or separation agreements from preventing an employee from disclosing information about unlawful acts in the workplace. “Information about unlawful acts in the workplace” is defined in the law as including information pertaining to harassment or discrimination or any other conduct that the employee has reasonable cause to believe is unlawful. A non-disparagement or other contract provision that restricts an employee’s ability to disclose information related to conditions in the workplace must now include 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.” However, employers may still include a general release or waiver of all claims in a separation or severance agreement. Beginning January 1, 2022, separation and severance agreements must now notify the employee that the employee has a right to consult an attorney regarding the agreement, and provide the employee at least five business days to consider the agreement and consult an attorney. Employers may prohibit employees from disclosing the amount of severance paid.
Additionally, SB 331 prohibits employers from requiring an employee, in exchange for a raise or bonus, or as a condition of employment or continued employment, to sign a release of a claim or right or sign a non-disparagement agreement or other document that denies the employee the right to disclose information about unlawful acts in the workplace.
SB 331 does not prohibit an employer from protecting the employer’s trade secrets, proprietary information, or confidential information that does not involve unlawful acts in the workplace.