Have you been re-using the same old agreement template that was drafted many years ago? Well, if you are in California, it is time for another refresh before year end (effective January 1, 2022).
Agreement to Settle a Claim or Lawsuit
The law currently prevents an employer from requiring victims of sexual assault or sexual harassment to agree to confidentiality regarding the underlying facts of their claims, SB 331 (recently signed by Governor Newsom) expands this prohibition to include other acts of workplace harassment or discrimination beyond those based on sex. Accordingly, a settlement agreement can still keep the amount of the payment confidential, but can’t impose non-disclosure obligations on the employee about the underlying facts related to a discrimination, harassment, or retaliation claim (on any protected basis, such as race, age or disability, not just sex). This is intended to prevent hush money type payments that are often touted in the press, and that arguably allow serial harassers (and other bad actors) to continue their malfeasance.
While prior law did not apply to separation agreements, such as upon layoff, or a negotiated exit, SB 331 changes that. Separation agreements must also carve out the ability to disclose any underlying facts in the workplace. Typically separation agreements do not involve specific claims, so the legislature drafted it as follows: “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 you have reason to believe is unlawful.” This wording can be modified, but must be presented in substantially similar form.
Oh, and an employee must be given at least five business days to review any separation agreement, and advised of the right to consult an attorney. Most separation agreements have this anyway, and any agreement for an employee over age 40 must still give 21 days under the ADEA.
Confidentiality Agreements and Non-Disclosure Agreements Also May Be Impacted
SB 331 also addresses non-disparagement agreements and “other documents” required of employees beyond settlement or separation agreements. In fact, any agreement that has the purpose or effect of prohibiting the disclosure of information about unlawful acts in the workplace must now include the same quoted language referenced above. Employers with broad Confidentiality or NDA agreements should take note, and amend these documents for 2022.
If your template agreements are more than a few years old, then you may want to take a look at some other updates from recent years that we blogged about, including this post (about the original prohibition relating to harassment claims and updated Civil Code 1542 language), and this post regarding provisions limiting rehire (aka “no future employment”).
If you are paying to resolve claims, or buy peace, or protect your confidential information, you might as well make sure the agreement documenting those terms is enforceable. Otherwise you could pay without the protection you thought you were buying!
Note: This blog post was updated on October 18, 2021.