SB 331 builds on SB 820, also known as the STAND Together Against Non-Disclosure Act, which California passed in 2018 in response to the #MeToo movement. In response to what supporters of the movement called the “secret regulations” used to cover up cases of sexual harassment involving senior executives, the STAND Act prohibited the use of confidentiality provisions in settlement agreements for acts, including claims based on gender. For example, stand has allowed employees to discuss factual information about sexual harassment in the workplace for several years. SB 331 extends section 12964.5 to termination agreements. The new law prohibits an employer from including in an exit agreement a non-disparagement clause prohibiting the disclosure of facts about harassment and discrimination. The law provides that an agreement concluded in violation of one of these prohibitions is contrary to public order and is unenforceable. For employers and managers who may be the subject of a harassment complaint in the future, it is important to assess, in almost all situations, whether a solution rather than litigation should be considered based on the cost of the litigation, but for no other reason. It is important to understand that while legislation and public opinion may restrict the use of NDAs and internal pressure to abandon the practice may increase, it may be crucial to retain the ability to use NDAs if, for example, disclosure of the underlying “facts” would mean disclosure of inflammatory and falsified allegations. NDAs are not necessarily intended to silence the truth.
In most cases, “the truth” is in the eye of the viewer. That is why we have juries. Non-disclosure agreements allow both parties not to negotiate their respective versions of the truth with a settlement agreement that leaves this and any other issues behind. Governor Newsom signed Senate Bill 331 (SB 331), which further restricts the use of non-disclosure agreements (NDAs) and settlement agreements to regulate labor rights related to harassment, discrimination, or retaliation. The frequent and interchangeable use by the media of the terms non-disclosure agreements (“NDAs”) and confidentiality agreements has led to some confusion as to the meaning of these terms. NPAs as stand-alone agreements are rare in the context of labour disputes and are more commonly used in the business context of companies seeking to legitimately protect confidential business information from inappropriate disclosure. Settlement agreements are more commonly used in the employment context to resolve workplace claims, and these agreements usually include a confidentiality clause. A settlement agreement is not the same as a non-disclosure agreement, but the confidentiality clause of the settlement agreement has a similar effect. For employees with privacy concerns who want to protect themselves from the public`s attention, the No Further Silence Act does not touch the exception that allows applicants to preserve their privacy. Therefore, at the request of the applicant, a settlement agreement may always contain a provision that protects the applicant`s identity and any fact that could lead to the discovery of the applicant`s identity.
Under the previous legislation, this exception does not apply if a government agency or official is a party to the settlement agreement. Until a jury rules, the facts are almost always contentious, so that when two parties settle a dispute with a settlement and a non-disclosure agreement, they almost always agree to disagree on the veracity of the employee`s claims and the merits of the employer`s defense. Finding facts can be embarrassing and harmful to both parties. Therefore, it is often desirable for both parties to use a non-disclosure agreement so that neither party has to publicly respond to the other party`s version of events. Because if there is no NDA, there is also no obligation for the employer to remain silent if he is attacked with allegations that he knows to be false or misleading. Please note that this bill is not retroactive and applies to agreements entered into on or after January 1, 2022. However, it is important to assess the benefits of NDAs before proceeding to restrict and even abolish these NDAs, and we suggest that the focus #MeToo on NDAs may be shifted. When employees threaten to take civil action against their supervisor or employer, or file a civil lawsuit, they usually seek a solution through financial compensation. From the employer`s perspective, the employee`s claims may be false, incomplete, semi-truthful, or simply assertions that, while true, are not sufficient to establish a legal claim. . . .