SB 331 – Expands Existing Restrictions Against Employment-Related Non-Disparagement Agreements And Non-Disclosure Clauses In Settlement Agreements

In 2019, the Legislature adopted several laws that restricted the use of “non-disclosure” provisions in employment related agreements.  Those existing restrictions prohibit any provision in a settlement agreement that prevents the disclosure of information related to claims regarding certain forms of sexual assault, sexual harassment, workplace harassment or discrimination based on sex, failure to prevent workplace harassment or discrimination based on sex, or retaliation for reporting workplace harassment or discrimination based on sex.  Existing law also makes it unlawful for an employer, as a condition of continued of future employment, or in exchange for a raise or bonus, to sign a non-disparagement agreement or other document that purports to restrict the employee’s right to disclose such information.  Senate Bill 331 (SB 331) expands these provisions.

Under SB 331, a settlement agreement may not contain a provision that prevents or restricts disclosure of factual information related to a claim filed in a civil or administrative action regarding any form of discrimination based on protected classifications.  SB 331 also expands the restrictions on employment-related non-disparagement or non-disclosure agreements in several ways:

1. Such agreements are now unlawful to the extent it has the purpose or effect of denying an employee’s right to disclose information about unlawful acts in the workplace, not only if the agreement actually purports to deny such rights.
2. Any contractual provision that restricts an employee’s ability to disclose information related to conditions in the workplace must include the following statement, or substantially similar 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.”

In addition, SB 331 prohibits an employer from including any provision that prohibits the disclosure of information about unlawful acts in the workplace in an agreement related to an employee’s separation from employment, except in a negotiated settlement agreement to resolve an underlying claim filed by an employee in court, before an administrative agency, in an alternative dispute resolution forum, or through an employer’s internal complaint process.  For this exception to apply, the agreement must be voluntary, deliberate, and informed, the agreement must provide consideration of value to the employee, and the employee must be given notice and an opportunity to retain an attorney or be represented by an attorney.

(SB 331 amends Section 1001 of the Code of Civil Procedure, and Section 12964.5 of the Government Code.)