What California’s “Silenced No More Act” Means For Employers

On October 7, Gov. Gavin Newsom signed Senate Bill (SB) 331 into law. This bill, dubbed the “Silenced No More Act,” imposes new restrictions on California employers who wish to negotiate settlement or severance agreements with employees. What employee statements will be “Silenced No More?”  The employees’ statements about possible “unlawful acts” in the workplace, including work-related discrimination.

Additional Restrictions on the Use of Non-Disclosure, Non-Disparagement Agreements

As you may know, California previously banned the use of settlement agreements to prevent the alleged victim employee’s disclosure of “factual information” related to acts of sexual assault or sexual harassment in the workplace. SB 331 essentially extends this rule to all types of workplace discrimination, not just those based on sex. So, under the new law, employers cannot use a severance or settlement agreement to stop an employee in any legally protected class from reporting potential acts of discrimination, except in certain narrow circumstances.

At the same time, SB 331 imposes new obligations on employers to notify an employee that they have a right to consult with an attorney before signing any severance agreement. Typically, such a provision offering a legal consultation before signing is in good severance agreements; however, some employers require the employee to sign and return the agreement almost immediately. Under SB 331, the employer must also provide a “reasonable time period” of not less than five (5) business days for the employee to consider the agreement and, presumably, to find a lawyer to review it. This prevents an employer from demanding that the employee sign on the spot, or even within a few days thereafter, and from inducing the employee’s signature through fraud, misrepresentation or threats.

Another key provision of SB 331 addresses the use of non-disparagement agreements. These are contract provisions by which a former employee agrees not to criticize a former employer or any of its remaining employees publicly, in exchange for the funds, or consideration, offered as the severance or settlement sum. Some employers ask their employees to sign non-disparagement agreements at the time of hiring, as well. These agreements also often include liquidated damages provisions, by which the employee agrees to pay a predetermined financial penalty to the employer if the employee is caught disparaging the employer.

In 2018, California restricted the use of non-disparagement agreements to prevent employers from requiring them “as a condition of employment or continued employment.” In other words, an employer can no longer require an employee to sign a non-disparagement agreement to stay employed or receive certain benefits, such as a raise. SB 331 goes a step further and applies these restrictions to severance and settlement agreements as well.

That said, an employer may still negotiate a severance agreement that includes a general release or waiver of any legal claims an employee might have against the employer. Such agreements may also continue to protect the employer’s trade secrets or confidential information from disclosure by the former employee. And, if there is any severance pay included in the agreement, the employer may request that information be kept confidential.

Contact California Employment Lawyer Karen J. Sloat Today

SB 331 is yet another sign that California employers need to tread carefully when seeking to resolve disputes with employees concerning allegations of harassment or discrimination. An experienced Riverside County & Coachella Valley employment lawyer representing employers can provide valuable guidance and assistance in helping to understand these latest changes to the law. Contact Sloat Law Group today if you need to speak with an attorney right away.

Source:

leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=202120220SB331