Employment Agreements: New Restrictions on Non-Disparagement, Release of FEHA Claims, and Sex Harassment Confidentiality Provisions

Non-disclosure agreements and releases of FEHA claims have been declared contrary to California public policy and unenforceable, except in certain situations. Effective Jan. 1, 2019, a new section to the Government Code, section 12964.5, will be added.

It prohibits employers, in exchange for a raise, bonus, or as a condition of employment, from requiring employees to sign a release of claims under FEHA, or a non-disparagement agreement that inhibits the ability of an employee to disclose illegal acts in the workplace, including but not limited to sexual harassment. To be added section 12964.5, however, does not apply if the non-disclosure or release is part of a negotiated settlement agreement to resolve a claim filed in court, before an administrative board or ADR forum, or through the employer’s internal complaint process. In addition, the statute would not apply to severance agreements, since it is not an exchange for a “raise, bonus, or condition of employment or continued employment.”

Furthermore, the wake of the #metoo movement has also spurred a new section 1001 to the California Code of Civil Procedure, which prohibits a confidentiality clause pertaining to sexual harassment. Any provision within a settlement agreement that prevents the disclosure of factual information related to claims of workplace sexual harassment or sex discrimination, and/or claims for failure to prevent or retaliation for reporting the same are void as a matter of law beginning 2019. Confidentiality relating to the identity of the claimant and the settlement amount remains permissible. Employers should take special care as they enter into transition of employment agreements (wherein the parties agree that the employee will continue their employment for a limited period of time for main purpose of transitioning accounts, in exchange for valuable consideration).