California bars forced non-disclosure clauses in severance agreements

October 8, 2021

By Paresh Dave

(Reuters) – California will bar companies from requiring non-disclosure agreements in settlements with employees over workplace harassment claims under a bill signed into law on Thursday in a win for tech workers who championed the proposal.

The Silenced No More Act had been co-sponsored by Ifeoma Ozoma, who quit Pinterest Inc last year after voicing concerns about gender and racial discrimination, and also drew backing from organizations including TechEquity Collaborative that advocate for workers in tech and other industries.

Supporters say the law, which goes into effect Jan. 1, will enable workers to speak out about experiences of harassment and discrimination without fear that companies could tear up severance packages. They say allowing more people to publicly address workplace treatment could help curb systemic racism and other problems ailing many companies.

The new law says settlement agreements cannot prevent or restrict workers from disclosing facts related to harassment and discrimination claims they have filed against the company. It also bars settlements from including non-disparagement clauses that stop people from talking about unlawful acts in the workplace.

As part of efforts to respond to #metoo stories, California lawmakers three years ago banned companies from imposing non-disclosure agreements, or NDAs, in cases of sexual harassment, sexual assault or sex discrimination out of concern that secret deals were allowing companies to maintain problematic cultures.

The new law covers confidentiality in a broader range of cases, including racial discrimination and harassment based on disability.

Ozoma last year said that as a Black woman, she was pushed aside by managers at Pinterest for some tasks and underpaid. Supporters said the new law will help hold companies accountable to promises they have made to offer a diverse and inclusive workplace.

Pinterest signed on as a supporter of the legislation.

(Reporting by Paresh Dave; Editing by Stephen Coates)

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