Facts

Marcie Hamilton worked for Juul Labs Inc as a manager. As a condition of employment at Juul, Hamilton was required to sign an NDA, "Proprietary Information and Invention Assignment Agreement." The NDA not only included a restriction on disbursing confidential information, it also had a non-disparagement provision which prohibited employees from disclosing anything that could be detrimental to the company's interests. When employees were terminated, as Hamilton was, they were required to sign a "Termination Certificate." The certificate further required employees to verify that they had complied with the NDA. Then, in order for equity to vest after employment and other benefits, a Severance Agreement was also required to be signed. The Severance Agreement included a general release of claims (including those arising from Fair Employment and Housing Act) and another non-disparagement clause. Finally, the Severance Agreement required the employees to keep the Severance Agreement's existence and terms confidential. Hamilton sued Juul under several different statutes involving: whistleblower laws (Labor Code Section 1102.5a and Government Code Section 12964.5a); employer retaliation for lawful conduct during nonworking hours away from employer's premises (Labor Code Section 96k); employer prohibitions on disclosing or discussing wages and working conditions (Labor Code Section 232, 232.5, 1197.5k); protections for employees to engage in political activity without employers' interference (Labor Code Section 1101, 1102); and the illegality of contracts that restrain trade and making illegal overbroad or oppressive NDA agreements (California Business and Professions Code Section 16600).

PLAINTIFF'S CONTENTIONS: Plaintiffs contended that defendant maintains policies and practices that unlawfully prevent employees from engaging in whistleblowing, making disparaging remarks about the company, seeking new or better employment opportunities, disclosing information about their wages and working conditions and other protected activities. Not only were these restrictions maintained through paperwork (such as the NDAs and employee handbooks), the message of not speaking to the press or government was continued at meetings, and through emails. The NDA was applicable not only during work hours but is in effect 24 hours and even after an employee had left Juul.

DEFENDANT'S CONTENTIONS: Defendant denied all contentions, arguing that plaintiff failed to show that its agreements or employee handbook policies prohibited those activities.

Result

The case settled for $2.2 million and Juul is required to modify its policies and notify former employees that they have the right to engage in whistleblowing, and to speak about wages and working conditions. If Juul substantially complies with the terms, the nearly $1 million penalty that was attributable to the current employees will be suspended.