What California Employers Need to Know About the Silenced No More Act

California's SB 331, which is known as the Silenced No More Act, took effect on Jan. 1 and expands restrictions on the use of confidentiality provisions in certain employment-related settlement agreements.

Since January 2019, California SB 820 has restricted the use of confidentiality provisions in agreements related to sexual assault and harassment. Starting on Jan. 1, 2022, SB 331 extended those restrictions to confidentiality provisions related to all claims of harassment, discrimination and retaliation under the Fair Employment and Housing Act (FEHA).

Here's what California employers need to know about the requirements under the two laws.

Background

SB 331 expands upon the requirements put into place by SB 820, which is known as the Stand Together Against Non-Disclosure (STAND) Act and was passed in 2018 during the height of the #MeToo movement. In particular, the STAND Act prohibited the use of settlement agreements that prevent employees from disclosing factual information about specific acts related to claims filed in court or with an administrative agency. These acts include sexual assault, sexual harassment, workplace harassment or discrimination based on sex, failure to prevent such an act, or retaliation against a person for reporting such an act.

Proponents of SB 331 have argued that the STAND Act was inadequate because employers could still require nondisclosure agreements (NDAs) for cases involving all other forms of discrimination, harassment and retaliation. Thus, in a settlement involving varied claims of intersectional discrimination, the claimant could, for example, speak about the alleged sex discrimination but be prohibited from discussing the alleged race discrimination.

Expanded Requirements

SB 331 took effect on Jan. 1, 2022. Here are the key provisions California employers should carefully review:

Expanded restrictions on confidentiality. The parties to a settlement agreement may not prevent or restrict an individual from disclosing the underlying factual information relating to all claims of harassment, discrimination or retaliation under the FEHA, including but not limited to claims based on race, sexual orientation, religion, color, national origin, ancestry, disability, medical condition and age. As noted above, this restriction builds upon and expands SB 820, which initially prohibited confidentiality agreements relating only to claims based on sex.

Expanded restrictions on non-disparagement provisions. An employer cannot require an employee to sign a non-disparagement agreement that has the purpose or effect of denying the employee the right to disclose information about unlawful acts in the workplace.

In addition, if an agreement includes a non-disparagement provision, the agreement must also 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."

Expanded restrictions on severance agreements. A severance agreement may not prohibit a former employee from disclosing information about unlawful workplace acts unless 1) the provision is part of a settlement agreement to resolve an employment discrimination-related claim that the employee has filed in court, "before an administrative agency, in an alternative dispute resolution forum, or through an employer's internal complaint process" and 2) "the employee [was] given notice and an opportunity to retain an attorney or [was] represented by an attorney."

In addition, an employer must give an employee or former employee at least five days to consider any severance agreement the employer offers the employee.

The employer also must explain that the employee has the right to consult an attorney regarding the severance agreement.

Lastly, SB 331 clarifies that a severance agreement may 1) include a "general release or waiver of all claims," 2) prohibit the disclosure of "trade secrets, proprietary information or confidential information that does not involve unlawful acts in the workplace," and/or 3) require that the amount of the severance paid remain confidential.

Key Takeaways

California employers should carefully review their settlement agreements and related protocols to ensure compliance and best practices. SB 331 applies to agreements entered into on or after Jan. 1, 2022, so employers should re-evaluate their strategic approach to pre-litigation claims involving harassment and discrimination.

All in all, employers would do well to consult with experienced legal counsel regarding the need for any changes to their settlement and severance agreement templates and their resolution strategy for active and future cases involving discrimination claims.

Julia Trankiem and Timothy Kim are attorneys with Hunton Andrews Kurth LLP in Los Angeles.