Expanded Limitations for NDAs in Settlement Agreements

Governor Newsome recently signed Senate Bill 331 which contains changes to the Code of Civil Procedure that will go into effect starting on January 1, 2022. The most notable changes include amendments to section 1001 of the California Code of Civil Procedure and section 12964.5 of the Government Code.

Code of Civil Procedure Section 1001

Previously, the code only prevented settlement agreements of any non-disclosure agreement from including the disclosure of information regarding sexual harassment and sexual discrimination. The new amendment has a broader scope that covers all of the harassment and discrimination categories that are protected in California. NDAs in settlement agreements will no longer include restrictions of factual information regarding discrimination or harassment based on characteristics of race, color, national origin, ancestry, religion, creed, age, disability, medical condition, genetic information, marital status, sexual orientation, and military status.

Government Code Section 12964.5

It has already been established that non-disparagement agreements that prevent employees from disclosing information regarding harassment or discrimination is unlawful. An employer may not require an employee to sign a non-disparagement agreement of that sort for compensation nor to maintain employment.

The amendment to section 12964.5 implements the same practices to severance agreements. Any agreement that is not in accordance with the amendment is not enforceable.

Employers must notify any employee they offer a separation agreement that they have a right to consult an attorney about the agreement. The employer must give the employee a reasonable time of at least five business days after notice. The employee can choose to sign the agreement before the five days expire.