On August 30, 2021, the California legislature passed the Silenced No More Act, which allows employees who have experienced harassment or discrimination in the workplace to speak out even if they have reached a settlement with their employer concerning their allegations. Governor Newsom signed the bill into law late last week.

The new law expands on existing protections for workers recently enacted in the wake of the #MeToo movement. The 2018 Stand Together Against Non-Disclosures (STAND) Act prohibited non-disclosure agreements that restricted employees from speaking up about cases involving allegations of sexual harassment, sexual assault, or gender-based discrimination. Before the STAND Act, employers would often rely on NDAs in settlement agreements to effectively buy off victims of sexual harassment, silencing them during and after their lawsuit. Plaintiffs have often been prohibited from discussing their stories with the media, on social media, and even in private conversations with friends and family. Aggrieved employees with limited options and financial resources were kept quiet, allowing employers to avoid the public scandal and, in many cases, to continue with practices that permitted or even fostered a culture of sexual harassment and abuse.

Other recently enacted California laws prevent employers from requiring employees to sign non-disparagement or other agreements as a condition of employment that would restrict employees’ rights to disclose unlawful conduct in the workplace. The laws pertaining to NDAs in employment agreements cover all forms of discriminatory conduct. The restriction on NDAs in settlement agreements under the STAND Act, however, is more limited.

“Silenced No More” Expands the STAND Act’s Reach

The STAND Act is restricted to gender-based harassment and discrimination; hostile work environments and discrimination targeted at other protected characteristics are not covered. Under the Silenced No More Act, victims of other forms of harassment and discrimination will now be protected as well. The new law will prohibit employers from requiring employees to sign NDAs as part of any agreement relating to the employee’s separation that would prohibit disclosure of unlawful acts in the workplace, as well as prohibit settlement agreements preventing disclosure of any harassment, retaliation, or discriminatory conduct. The new law protects disclosure about discrimination or harassment based on race, religion, ethnicity, age, disability, sexual orientation, and other protected characteristics.

The law also prohibits courts from entering a gag order that would prevent plaintiffs from talking about harassment or discrimination allegations. The law does permit courts to restrict the disclosure of the plaintiffs’ identities, however.

Laws May Still Provide Room for Non-Disparagement Agreements

Jon McGrath, a California employment lawyer who represents both employees and employers in discrimination and harassment claims, has given a close reading to both laws. He says that although non-disparagement provisions have become significantly diminished, there are still many good reasons to include them in a release agreement. “First,” he says, “the STAND Act appears to only prohibit an employer from restricting ‘the disclosure of factual information related to a claim filed in a civil action or a complaint filed in an administrative action.’ This should mean that the law does not restrict the disclosure of factual information regarding FEHA claims that have not yet been filed.” McGrath shares that another good reason to have a confidentiality agreement is that “it protects against disclosure of amounts paid pursuant to the settlement agreement.”

Like the STAND Act, the Silenced No More Act is also limited in scope, according to attorney McGrath. He points out that the new law’s prohibition only pertains to a non-disparagement agreement or other documents which must be signed in “exchange for a raise or bonus, or as a condition of employment or continued employment,” or as a part of a severance agreement. He emphasizes that, unlike the STAND Act, the section of law amended by the Silenced No More Act specifically states that it “does not apply to a negotiated settlement agreement to resolve an underlying claim under this part that has been filed by an employee in court, before an administrative agency, in an alternative dispute resolution forum, or through an employer’s internal complaint process.”

In McGrath’s opinion, the new law will not do much to slow the pursuit of settlement agreements. He explains, “Especially for small to mid-size businesses without EPL [employment practices liability] insurance, an early settlement may be the only way to avoid financial disaster. The time and expense to undergo litigation is significant. Settlement agreements are intended for all parties to move on with their life. Most do.”

Finally, McGrath points out that if employers want to protect their image amid allegations of harassment in the workplace, they can start by having good policies and practices in place. “Acts of harassment likely cannot be completely eliminated in workplaces,” he explains. “As such, employers should do everything in their power to protect their employees and, if necessary, investigate and remedy a harassing work environment. This includes disciplining, transferring or terminating an employee who has engaged in unlawful harassment to ensure that the harassing work environment does not persist.”

The bill passed out of the legislature on September 30 and sat on the governor’s desk for more than a month before Governor Newsom signed the bill on October 7. Similarly, the STAND Act in 2018 also took a month for Governor Brown to sign. One can only speculate how much of that time was spent in gubernatorial reflection and analysis. McGrath cautions that restrictions on contracts should be well-thought-out and not signed into law without a full understanding of the effects of such restrictions. “While Governor Newsom may have elected to invade contractual rights to, in his belief, make workplaces safer and less abusive and to allow for the free communication of certain facts,” McGrath warns, “his decision will likely not come without many negative side effects.” The law is set to take effect at the beginning of 2022.

Some tech companies voiced support for the new law even before it was enacted, vowing to implement the same policies. Other companies like Facebook, Google, and Apple have not publicly stated whether they would expand Silenced No More Act protections to employees outside of California. It remains to be seen how this law will affect companies with offices located inside and outside of California, both as to what the companies will be legally required to do and how they will voluntarily choose to act.