On September 30, 2018, California Governor Jerry Brown signed into law a bill that prohibits a provision in settlement agreements that prevents the disclosure of information pertaining to sexual harassment and sex discrimination. The law goes into effect on January 1, 2019, and serves as an extension of the already-existing law that prohibits provisions in settlement agreements that prevent the disclosure of acts that could be prosecuted as felony sex offenses and certain sex offenses against children.

This new law will apply to both public and private employers, and to both civil and administrative actions. Specifically, the law will prohibit any provision in a settlement agreement that prevents the disclosure of factual information regarding:

• Acts of sexual assault;

• Acts of sexual harassment as defined under Civil Code Section 51.9;

• Acts of workplace sexual harassment;

• Acts of workplace sex discrimination;

• The failure to prevent acts of workplace sexual harassment or sex discrimination; and

• Retaliation against a person for reporting sexual harassment or sex discrimination.

Any provision in a settlement agreement entered into on or after January 1, 2019 that prevents the disclosure of the information above will be considered void as a matter of public policy.

The law does permit a provision that would safeguard the identity of the claimant and any facts that could lead one to discover the claimant’s identity, but only at the request of the claimant and in matters not involving a government agency or public official. The law also permits a provision that prevents the disclosure of the amount paid to settle the claim, at the request of either party.

Courts may award civil damages for a violation of the new law, and in doing so will consider any pleadings or other papers on file in the action. Further, although not expressly stated in the new law, attorneys should be aware of the risk of being disciplined by the State Bar of California for a violation. This is expressly stated in the already-existing law referenced above pertaining to felony sex offenses, noting that attorneys are subject to investigation and discipline by the State Bar of California for demanding that such a non-disclosure provision be included in a settlement agreement.

Takeaways

California employers should consider this new law when deciding whether to settle matters. Factual information surrounding allegations of sexual harassment, discrimination, and retaliation will no longer remain confidential, resulting in a greater reputational risk to even the best-run companies. This also serves as reminder of how important it is for all employers to review and revise where necessary their anti-harassment, discrimination, and retaliation policies on a more frequent and consistent basis.