On October 7, Governor Newsom signed S.B. 331, the Silenced No More Act (“Act”), into law. The Act will take effect January 1, 2022. Existing California law limits the use of non-disclosure agreements (“NDAs”) to settle already-filed claims alleging assault, discrimination, harassment, or retaliation on the basis of sex. The Act expands the law to include any legally protected basis. The Act also clarifies that NDAs cannot be used in certain employment agreements (including bonus or separation agreements) to prevent or restrict the disclosure of factual information related to unlawful acts in the workplace.
The STAND Act: In 2018, the California legislature passed the STAND (Stand Together Against Nondisclosures) Act in response to the #MeToo movement. The STAND Act was codified in California Code of Civil Procedure section 1001 (“Section 1001”) and prohibits provisions in settlement agreements that restrict the disclosure of facts related to already-filed claims alleging assault, discrimination, harassment or retaliation on the basis of sex.
The STAND Act created exceptions for provisions that shield the identity of the claimant and the amount paid in settlement of a claim. Additionally, parties can continue to agree to complete confidentiality in the settlement of threatened claims that are not yet filed in court or with an administrative agency.
The Silenced No More Act: The Act expands the scope of Section 1001 to include claims based on any act of workplace discrimination or harassment, including on the basis of race, religion, disability, medical condition, age, and other protected characteristics. Section 1001 still only applies to claims that have been filed in civil or administrative actions.
Additionally, the Act amends California Government Code section 12964.5 (“Section 12964.5”) in several ways.
First, it prohibits provisions in certain employment agreements (i.e., agreements that relate to raises or bonuses, or that are imposed as a condition of employment or continued employment) that: 1) have the “purpose or effect of denying” employees the ability to disclose information about unlawful acts in the workplace; or 2) release a claim or right. (Section 12964.5(a).)
Second, Section 12964.5 now prohibits provisions in pre-litigation separation agreements that have the “purpose or effect of denying” the ability to disclose information about unlawful acts in the workplace. (Section 12964.5(b).) These agreements must also notify the employee of the right to consult an attorney and provide the employee with a reasonable time period of at least five business days to allow such consultation. Employers may continue to include a general release or waiver of claims in separation agreements.
Additionally, Section 12964.5 provides that NDAs must 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.”
Notably, Section 12964.5 does not: 1) apply to a negotiated settlement agreement to resolve an underlying claim that has been filed in court or before an administrative agency (which are governed by Section 1001), or an underlying claim that has been filed in an alternative dispute resolution forum or through an employer’s internal complaint process; 2) prohibit a provision that shields disclosure of the amount paid in a separation agreement; or 3) prohibit a provision that protects the employer’s trade secrets, proprietary information or confidential information.
Action Items: Agreements that do not comply with these new requirements may be declared unenforceable. As a result, it is critical that employers review their agreements, policies, and practices to ensure that they do not infringe on these laws.
If you are interested in discussing these issues, or have any questions about this blog, please feel free to contact us.