California CCP 1001: Expanded Restrictions on Employer Non-disclosure and Non-disparagement Agreements

California CCP 1001 and the Silenced No More Act restrict employer nondisclosure and nondisparagement clauses in workplace settlement agreements. Updated FEHA provisions protect employees who share information about unlawful workplace conduct and set strict limits on severance confidentiality.

By Brad Nakase, Attorney

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Table of Contents
1. Introduction
2. Effect of the Act (CCP 1001) on Section 100
3. What Impact Does the Act (CCP 1001) Have on the FEHA?

Introduction

Non-disparagement contracts are prohibited by the law in California. It also bans other provisions/agreements that prevent disclosure of illegal conduct in the workplace. It places significant restrictions on companies regarding non-disclosure terms in specific settlement contracts involving a wide range of employment-related claims.

The Silenced No More Act was signed by Governor Gavin Newsom (California). Connie Leyva (Senator) presented the CCP 1001 Act. It is to guarantee that those who file complaints regarding illegal activity at work can openly discuss their experiences. It relates to covered agreements signed on or after 1st January 2022. It alters both the California Fair Employment & Housing Act (Section 12964.5) of the California Government Code & Section 1001 of the California Code of Civil Procedure (CCP 1001).

Effect of the Act (CCP 1001) on Section 100

The current version of CCP 1001 forbids the use of non-disclosure clauses in settlement contracts that prevent the release of factual information relating to claims made in a civil lawsuit or a dispute brought in an administrative proceeding for the following: sexual assault (not covered by CCP’s Section 1002, subdivision (a)); sexual harassment (as stated in Section 51.9: California Civil Code); workplace harassment or discrimination centered on sex; failure to stop workplace harassment or discrimination due to sex; and reprisal for revealing harassment or prejudice based on sex.

Acts of prejudice, harassment, inability to prevent discrimination or harassment, and reprisal for opposing or reporting discrimination or harassment because of other categories protected by California law are all covered by the Act. The CCP 1001 maintains the restriction that Section 1001 exclusively applies to contracts settling claims brought in an administrative or civil action procedure, despite broadening the scope of conduct covered.

Additionally, the CCP 1001:

  • Maintains the requirement that provisions that violate the specified limitations of the law are null and void as an aspect of law and good policy.
  • Permits the addition of a clause that, unless a governmental agency or government employee is an affiliate of the mediation agreement, protects the plaintiff’s identity and any information that might lead to the plaintiff’s identity being discovered, including court declarations.
  • Permits clauses mandating the confidentiality of the settlement sum.

What Impact Does the Act (CCP 1001) Have on the FEHA?

The present version of the FEHA prohibits some non-disparagement arrangements and other contracts that prohibit employees from sharing information regarding illegal activity at work as a requirement for being employed or in return for a bonus or increase. The Act CCP 1001 makes the following changes to the FEHA:

  • Forbids the inclusion of clauses in separation/severance agreements that limit the sharing of information about illegal activity.
  • Requires non-disparagement contracts and other terms of employment that limit an employee’s ability to reveal information about working conditions to contain a standard language (including when these clauses are incorporated in a severance/separation agreement): “This agreement does not prohibit you from speaking or revealing information regarding unlawful behavior in the workplace, including discrimination or harassment, or any other activity that you perceive to be unlawful.”
  • Mandates that when an employer offers a separation or severance agreement, the employee must be informed that they have the opportunity to speak with a lawyer about the agreement and be given at least five working days to do so.

Furthermore, non-disparagement contracts and other documents or agreements (apart from severance or separation contracts) that have the intent or effect of preventing a worker the liberty to share details of illegal conduct in their place of employment (and/or disregard the particular phrases set forth previously, when required) continue to be unenforceable under the CCP 1001 Act, which is against public policy. In a similar vein, the law renders certain clauses and exclusions in separation or separation agreements invalid and contrary to public policy.

Regarding the FEHA, the CCP 1001 Act also stipulates that severance agreements may: (1) include an overall release or absolution of all claims; (2) forbid the disclosure of secret data, business secrets, or proprietary data that does not involve unlawful acts in the place of employment; and (3) mandate that the sum of severance given remain confidential.

When a worker files a claim in a tribunal, before an agency of government, in a dispute resolution venue, or through a company’s internal complaint procedure, the FEHA continues to allow “negotiated settlement deals” that forbid the worker from disclosing details of illegal acts within the workplace. “Negotiated” refers to an arrangement that is voluntary, thoughtful, and informed; offers the employee something of value; and gives the employee notice and a chance to hire a lawyer or is actually represented by one.

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