On January 1, 2022, like every year, a host of new laws go into effect in California. Despite the ongoing pandemic, the California Legislature, led by a Democratic supermajority, sent hundreds of bills to Gov. Newsom for signature. Many of these new laws have far-reaching implications for consumers, government, housing, and the environment.

One new law, SB 331, imposes tough new limits on a common practice in certain types of legal disputes - the use of "secret settlements." These are often referred to as non-disclosure/disparagement agreements, or "NDAs." 

Typically, companies care a great deal about their reputation and goodwill, particularly in today's social media world where negative stories can go viral online and tarnish a company's name in a relatively short time. To prevent this from happening as a result of workplace disputes, companies will often settle employee claims or offer severance only on the condition the employee forever keep quiet about their on-the-job experiences.

In 2018, California enacted SB 820, banning this long-standing practice in sexual harassment cases. (See, Cal. Code Civil Procedure section 1001.) SB 820 grew out of the #MeToo Movement. 

On October 7, 2021, however, California took a bold step forward. Gov. Newsom signed into law a ban on secret settlements in other types of discrimination cases. Referred to by its sponsor, Sen. Connie Leyva-D of Chino as the "Silenced No More Act," SB 331 - set to go into effect today - amends Code of Civil Procedure section 1001 in significant ways.

First, the new law expands the 2018 ban to include any cases involving discrimination, harassment, or retaliation that are prohibited by California Government Code section 12940(a), (h), (i), (j), and (k). These Government Code provisions make it an unlawful practice to discriminate, harass, or retaliate against individuals in the workplace based on a wide variety of protected categories, including "race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or veteran or military status."

Second, the new law would ban secret settlement in cases involving "an act of harassment or discrimination, or an act of retaliation against a person for reporting harassment or discrimination by the owner of a housing accommodation, as described in Section 12955 of the Government Code."

Third, the new law prevents a court from entering an order containing a secrecy provision, even if the parties stipulate to the order.

Several other states, including Arizona, New Jersey, New Mexico, and Tennessee, have similar bans. However, California appears to be the first state in the nation to enact such sweeping prohibitions.

Initially, the California Chamber of Commerce opposed the new law. However, after amendments were added which permit employers to keep settlement and severance amounts confidential, the Chamber withdrew its opposition. The law is supported by a number of legal groups, labor groups, and women's rights organizations.