A businessman standing in the window of a high-rise building reading urgent business documents.
Date:
10/12/2021
Print Friendly

California Enacts the “Silenced No More Act,” Placing New Restrictions on Settlement and Separation Agreements

On Oct. 7, 2021, Governor Newsom signed into law SB 331, or the “Silenced No More Act,” which updates existing laws to place new restrictions on nondisclosure and non-disparagement provisions in agreements with employees and former employees. These updates apply to agreements entered into on or after Jan. 1, 2022, except as noted below.

Expanded Restrictions on Settlement Agreements

The Silenced No More Act both clarifies and expands existing law that prohibits settlement agreements from preventing the disclosure of information related to sex-based harassment discrimination claims.

In 2018, California enacted the Stand Together Against Non-Disclosures Act, or STAND Act, in a response to the #MeToo movement and the use of secret settlements to shield perpetrators of sexually inappropriate behavior. This law, section 1001 of the Code of Civil Procedure, prohibits a settlement agreement from preventing the disclosure of factual information relating to certain claims of sexual assault, sexual harassment, or harassment or discrimination based on sex, that are filed in a civil or administrative action. 

The Silenced No More Act amends the STAND Act in two ways:  First, the Silenced No More Act clarifies that the STAND Act’s restriction on nondisclosure provisions extends not only to provisions that prevent the disclosure of facts related to sex-based harassment and discrimination, but also to provisions that merely restrict such disclosures. Second, the Silenced No More Act expands the restriction on nondisclosure provisions to include facts related to acts of workplace harassment or discrimination not based on sex for settlement agreements entered into on or after Jan. 1, 2022.

New Restrictions on Non-disparagement Provisions and for Separation Agreements
The Silenced No More Act also expands the prohibition on non-disparagement provisions in employment-related agreements and adds a new prohibition on such provisions in separation agreements.

The California Fair Employment and Housing Act, or FEHA, prohibits various unlawful employment practices, one of which has to do with non-disparagement provisions in employment-related agreements. Under the current law, codified as California Government Code section 12964.5, it is an unlawful employment practice for an employer, in exchange for a raise or bonus, or as a condition of employment or continued employment, “to require an employee to sign a non-disparagement agreement or other document that purports to deny the employee the right to disclose information about unlawful acts in the workplace, including but not limited to, sexual harassment.” 

The Silenced No More Act makes multiple amendments to section 12964.5: First, the act makes two key amendments that are applicable to all nondisparagement provisions covered by this law:

1.  The phrase “information about unlawful acts in the workplace” is clarified to include “information pertaining to harassment or discrimination or any other conduct that the employee has reasonable cause to believe is unlawful”; and

2.  Any nondisparagement provision 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.”

Second, the act adds a prohibition against such nondisclosure provisions in separation agreements. 

Third, in addition to including the above language, a separation agreement must also notify the employee being offered the separation agreement that (a) the employee has the right to consult an attorney regarding the agreement, and (b) the employee has at least five (5) business days to do so.

Finally, while the Silenced No More Act expands the prohibition on non-disparagement provisions, it explicitly states that it does not prohibit the inclusion of a general release or waiver of all claims in a separation agreement and does not prohibit an employer from protecting its trade secrets, proprietary information, or confidential information that does not involve unlawful acts in the workplace.

Take-Away for Employers
Employers should update their standard form settlement and separation agreements, and all non-disparagement provisions within agreements covered by this law before Jan. 1, 2022, to ensure they comply with the Silenced No More Act. This is particularly true for any form separation agreements, which must now include specific disclosures to the employee regarding their right to consult an attorney and a reasonable time to do so.

Authors

Amy R. Patton, Partner
Partner
arp [at] paynefears.com
Daniel F. Fears, Managing Partner
Associate
bad [at] paynefears.com