What Happens in the Workplace No Longer Stays in the Workplace: California SB-331’s New Restrictions against Confidentiality Provisions in Separation Agreements

Nicole N. Wentworth

On October 7, 2021, California Governor Newsom signed SB-331, also known as the “Silenced No More Act.” The Act substantially restricts the right of employers to include confidentiality provisions in separation agreements under existing California law beyond its #MeToo origins. Beginning on January 1, 2022, the new law will prohibit confidentiality provisions in separation agreements involving workplace harassment or discrimination on any protected basis, not just on sex. Any provision in violation of this prohibition will be against public policy and unenforceable.

Expanding #MeToo Protections

In 2018, California passed SB-820, or the STAND (Stand Together Against Non-Disclosure) Act, in response to the #MeToo movement. The law, now California Code of Civil Procedure section 1001, prohibits confidentiality provisions in separation agreements that prevent the disclosure of factual information regarding sexual assault, sexual harassment, workplace harassment, or discrimination based on sex.

SB-331 amends Section 1001 of the Code of Civil Procedure and Section 12964.5 of the Government Code and significantly expands on the STAND Act by prohibiting confidentiality provisions that prevent the disclosure of factual information related to all forms of harassment, discrimination, and retaliation—not just based on sex. These protected bases include discrimination or harassment based on race, religion, disability, age, and sexual orientation. The new law also requires employers to notify employees signing a separation agreement that they have a right to consult with an attorney and to provide the employee with at least five days to do so.

SB-331 also has an impact on non-disparagement provisions. While employers may continue to use non-disparagement clauses in separation agreements, SB-331 prohibits non-disparagement provisions that would prevent an employee from disclosing information about unlawful acts in the workplace. To avoid drafting an unenforceable non-disparagement provision, employers should use specific language that carves out the employee’s right to disclose information about unlawful acts in the workplace. SB-331 provides that a non-disparagement provision should include language substantially similar to: “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.”

Preserving Some Confidentiality

Despite the changes under SB-331, employers still have a limited ability to keep some things private. The new law preserves STAND’s carve-out which allows employers to keep the amount paid in a separation agreement confidential. While employers may not be able to keep the facts underlying the agreement private, at least the amount can remain confidential.

California employers should prepare for this upcoming change in the law effective on January 1, 2022, by reviewing and revising any existing form separation agreements, non-disparagement clauses, and settlement agreements to comply with the new law before the end of the year. If you have any questions about California’s new restrictions against confidentiality provisions in separation and settlement agreements, please contact a member of our Labor & Employment team.

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: