SB 331: The Silenced No More Act

Under Senate Bill 331, California has effectively banned nondisclosure agreements in employment discrimination settlements. Effective January 1, 2022, SB 331, (the so-called "Silenced No More Act") will significantly expand existing prohibitions on the confidentiality provisions applicable to sexual assault and sexual harassment claims to now prohibit confidentiality restrictions related to all claims of harassment, discrimination or retaliation under the Fair Employment and Housing Act.

California employers should pay close attention to the following key provisions in the Silenced No More Act.

Expanded Restrictions on Confidentiality. The act adds new provisions to the Civil Code under which 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. This restriction builds upon and expands SB 820, which prohibited settlement agreements relating to claims based on sex as part of the #MeToo movement.

Expanded Restrictions on Nondisparagement. The new law adds provisions to the FEHA that makes it an unlawful employment practice for an employer to require an employee, as a condition of employment or to receive a raise or bonus, or as part of a separation agreement, to sign a nondisparagement agreement that has the purpose or effect of denying the employee the right to disclose information about unlawful acts in the workplace. If an agreement includes a nondisparagement 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. Under the new FEHA provisions, a severance agreement offered to an employee must give the employee notice and an opportunity to retain an attorney. In addition, an employer must give an employee or former employee at least five days to consider a severance agreement that the employer offers the employee.

Notably, the new FEHA provisions prohibiting a separated employee from disclosing information about unlawful acts in the workplace, as defined, do not apply to claims that are settled as part of a voluntary and informed agreement to settle a claim "that has been filed by an employee in court, before an administrative agency, in an alternative dispute resolution forum, or through an employer's internal complaint process."

Lastly, the Silenced No More Act 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.

In light of the Silenced No More Act's expanded restrictions, California employers should carefully review their settlement agreements and related protocols to ensure compliance with the new law. California employers also should ensure that separation agreement templates include the required five business day review period and reflect the employee's right to consult with counsel. Any provision in a settlement agreement entered into on or after January 1, 2022, that does not conform to SB 331 will be void as a matter of law. 