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NDAs targeted in proposed California employment law

| Mar 1, 2021 | employment law

In California, employers use non-disclosure agreements for many reasons. They are put in place not just to protect business innovations and secrets, but to avoid the negative response if there are allegations of wrongdoing such as employment law violations. NDAs are often used as part of settlements when workers claim to have been confronted with sexual harassment and discrimination. A proposed new law would give workers greater freedom to speak out about workplace issues by eliminating some provisions in NDAs. Companies that use NDAs should be cognizant of how this law might affect their business and be fully prepared in case it is passed.

Understanding the Silenced No More Act and how businesses may be impacted

The Silenced No More Act is based on the belief that employees who are allegedly victimized by discrimination and harassment in the workplace should not be prevented from speaking out about it based on an all-encompassing NDA. Discrimination for any reason – age, national origin, race, sexual orientation – is justification for a legal filing if it can be proven. Still, many employees cannot speak out even if they are shown to have had their rights violated and are compensated for it. This is believed to give violators coverage to continue acting in the same way with other employees.

This law is viewed as an extension of the STAND Act which was passed as the #MeToo movement was becoming prominent and showing how many people were subjected to sexual harassment on the job. The STAND Act stopped settlement agreements that kept workers from discussing cases in which they were sexually harassed. In addition to letting workers speak out about illegal treatment at work, The Silenced No More Act shields workers from putting severance packages at risk if they speak out.

The genesis of this proposed law is from legal claims against Pinterest in which two Black women said they were discriminated against. The company denied the allegations, but had paid a large settlement to a former COO who said she was discriminated against due to gender and was retaliated against. The two women who said they faced discrimination also settled their cases and had the right to discuss discrimination, but not racial bias.

Employers must be aware of the ramifications of this law

It is not an approval of illegal workplace behaviors for employers to be aware of how this possible change could negatively impact them. NDAs may currently shield employers from embarrassing and problematic revelations about accusations of harassment, discrimination and other employment law violations and the changes can stoke fundamental changes in the structure of these agreements. Understanding how to effectively address the challenges that may come up if this new law is passed is key and it may be wise to have professional assistance in adapting.