New Severance Restrictions in California

In January, Senate Bill 331 went into effect. An expansion of the STAND Act passed a few years ago, S.B. 331 now makes it unlawful to use confidentiality provisions in settlement and separation agreements that would silence a person who has alleged discrimination or unlawful activity in the workplace. Moving forward, employers must make sure they act in accordance with this new legislation when they find themselves in a dispute with one of their employees.

New Provisions

The new provisions included in S.B. 331 specify several new restrictions: first, employees must be given at least five days to consider the agreement before signing, but they may sign it sooner if they wish. The employer is also obligated to inform them that they may consult an attorney to discuss the terms before signing. 

Employers cannot restrict an employee from disclosing information pertaining to workplace harassment or discrimination, as well as any unlawful activity in the workplace unless already resolved through the courts or an alternative dispute resolution process. While nondisparagement provisions are still allowed, they may not prohibit an employee from discussing any of the aforementioned subjects on a factual basis. Employers can still protect necessary intellectual property and proprietary information that is critical to their operation by including a non-disclosure agreement, as long as those agreements do not restrict any discussion of unlawful activity as described. 

As with many of California’s employment laws, the intentions behind the passage of S.B. 331 are laudable in the sense of making it harder for employers to cover up discriminatory or unlawful behavior, but it remains to be seen how this will play out in the workplace when employees are freed to publicly allege discrimination or illegality with relative impunity. In the end, this is just one more wrinkle in an already very complex legal landscape. If your business is facing an employment dispute or potential issues in the workplace, contact Integrated General Counsel today.

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