By Julie Ann Giammona

Commencing January 1, 2019, California  employers were prevented from including provisions in severance agreements that prohibited an employee from disclosing facts about workplace harassment and discrimination based on gender.  Effective January 1, 2022, Senate Bill 331(SB 331), expands such prohibition to include the disclosure of facts related to claims of harassment or discrimination on the basis of any protected status, including, for example, race, national origin and disability. SB 331 also makes it an unlawful employment practice for an employer to stop an employee from disclosing “information about unlawful acts in the workplace,” whether in exchange for a raise or bonus, or as a condition of commencing or continuing employment, or as part of a separation agreement. If an agreement contains a non-disparagement provision, SB 331 mandates the following language be included:  “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.”

Moreover, a severance agreement must provide written notice of an employee’s right to consult an attorney, and then allow at least five (5) business days for an employee to do so. An employee may waive the five (5)  business day period, so long as the shortening of time is knowing and voluntary and is not induced by a threat to withdraw or alter the offer, or by providing different terms to employees who sign such an agreement prior to the expiration of such time period.

Despite the above restrictions, some good news exists. Notably, SB 331 does not apply to employees who have commenced an action against the employer (internal, administrative, or a civil lawsuit). Similarly, SB 331 does not prohibit the inclusion of a confidentiality provision that prevents disclosure of the actual dollar amount of the settlement. Lastly, at the request of the employee, the employee’s name may be kept confidential, unless one of the parties to the settlement agreement is a public entity.

As we move into 2022, Employers need to ensure compliance with SB 331 when entering into severance agreements. Ferber Law is available to assist in this process. We look forward to working with you.