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California to ban secret settlement of sexual harassment claims at work

The new law will apply to sexual harassment settlement agreements entered into beginning in 2019.

#MeToo has hit particularly hard in our state, especially in the Hollywood-based film and entertainment industry. Our state legislature has been active through public outreach in seeking ways to respond to the recent explosion of information about specific examples of sexual harassment in employment, both here and nationally.

One of the many bills Governor Brown signed on September 30, 2018, was S.B. 820, which among other things, bans so-called “secret settlements” of sexual harassment in the workplace claims and lawsuits, beginning with agreements signed on or after January 1, 2019. If parties include such a provision, it will be void and unenforceable.

The specifics

Confidentiality clauses will not be allowed in settlement agreements that would keep the details, including the perpetrator, of the settlement of a workplace sexual harassment claim filed in the U.S. Equal Employment Opportunity Commission or EEOC, the California Department of Fair Employment and Housing or DFEH or in a state or federal court.

The law reaches settlements of claims for workplace sexual harassment, sex discrimination (which would include that based on pregnancy, sexual orientation, and gender identity or expression) in employment, for failure to prevent the same and for retaliation against someone who reports these unlawful acts at work.

In addition, a court may not enter any order that would conflict with these restrictions.

The victim’s identity, however, may still be kept confidential (unless the employer is a public agency or government official) as may the dollar amount of the settlement.

Background and policy

The most recent Senate Floor Analyses (link available through state legislative information site linked to above) states that one purpose of the bill is to stop the practice of wealthy predators being able to buy the silence of victims in these agreements, allowing the perpetrators to continue to prey upon others. Rather, making their identities public is likely to keep other potential victims safer.

Specifically, the Analyses points to the examples of Harvey Weinstein, Bill O’Reilly and Roger Ailes as harassers who were able to buy silence through nondisclosure provisions in settlement agreements that kept their identities secret and allowed their behavior to continue. One of the sponsors of the bill, Consumers Attorneys of California, added to this the example of Bill Cosby, whose sealed 2004 deposition kept his behavior a secret for ten more years.

Opponents argue that if employers and individuals accused of workplace harassment must reveal their identity publicly if they settle, they may be less likely to settle, which may hurt victims who could lose in court and recover nothing. They note that there are business reasons to settle other than admitting that harassment happened.

Going forward, parties on both sides to such agreement should engage experienced legal counsel to advise them during negotiation and to be sure that agreement comply with the law.

The lawyers at Bononi Law Group LLP in Pasadena represent employees in the Los Angeles area and throughout Southern California in sexual harassment claims against their employers. We also advise employers about their responsibilities to prevent sexual harassment, including providing on-site training, and represent them in such disputes.

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