California Employment Law Blog

California Further Expands Limits on Non-Disclosure Provisions in Settlement Agreements

Posted by Timothy B. Del Castillo | Jan 11, 2022 | 0 Comments

Women with finger in front of mouth

SB 331, which went into effect on January 1, 2022, greatly expands SB 820's existing restrictions on nondisclosure provisions regarding claims of sexual harassment, discrimination, and/or assault. Now settlement agreements may not prohibit future discussion of claims over any kind of assault, harassment, discrimination, or retaliation.

Therefore, the ban on nondisclosure provisions in settlement agreements will now apply to settlements of claims where unlawful behavior was based upon factors such as race, national origin, or disability as well. This is a huge expansion of the previous law's coverage.

Some non-disclosure provisions are still allowed, though. Under SB 331, a claimant may request a non-disclosure provision protecting their own identity and facts that could lead to the claimant's identity. However, this is not allowed where one of the parties to the settlement agreement is a government entity or official.

Further, settlement agreements may also still conceal the amount the case settles for. Finally, SB 331 also allows non-disclosure provisions regarding trade secrets, proprietary information, and other substance unrelated to anything unlawful.

Employers should consult with counsel to bring their settlement agreements into line with the new law.

About the Author

Timothy B. Del Castillo

Timothy Del Castillo is the Founder and Managing Partner of Castle Law: California Employment Counsel, PC.

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