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April 2022

The “West Coast” Wave: The Expansion of Non-Disclosure Legislation From Sexual Harassment to Beyond – Employers Must Reconsider Their Non-Disclosure Terms

On March 24, 2022, Governor Inslee signed into law “Washington’s Silenced No More Act” (“Act”).[1] The Act replaces the 2018 law that was limited to claims surrounding the #MeToo movement and provided protections for victims of sexual harassment and assault. The Act goes into effect June 9, 2022, and is retroactive as to terms entered into during employment. It follows California’s recently enacted Silenced No More Act that prohibits non-disclosure and non-disparagement terms as of January 1, 2022, for discrimination, harassment, and retaliation claims.

What is Covered by Washington’s Silenced No More Act?

The Act is far broader than its 2018 predecessor, as it now prohibits any agreement not to disclose or discuss conduct, or the existence of a settlement involving conduct where the employee reasonably believes the conduct is illegal under Washington state, federal, or common law, including: discrimination, harassment, sexual assault, retaliation, wage claims, and wrongful termination. “Employee” as defined under the Act, is any current, former, or prospective employee, or independent contractor. The Act governs all employment-related agreements, including, for example: offers of employment, confidentiality agreements entered during employment, independent contractor agreements, agreements to pay compensation in exchange for the release of all legal claims (i.e., severance or settlement agreements), and any other workplace agreement entered into by an employer.  Employers must also be aware that the Act covers conduct that not only occurred at the workplace but also at work-related events coordinated by the employer, between employees, or between an employee and employer (regardless of where the conduct occurred).

The non-disclosure prohibition does not apply to the enforcement of confidentiality surrounding the severance or settlement amount.  The non-disclosure prohibition also does not prevent an employer from enforcing the protections of its trade secrets, proprietary information and “confidential information that does not involve illegal acts.”

The Act is retroactive for all agreements entered into at the beginning of or during the course of employment. This means that employers must review and amend their employment agreements with non-disclosure and non-disparagement language affording employer protection beyond its trade secrets, inventions, and proprietary information. Any non-disclosure and non-disparagement terms contained in a settlement or severance agreement entered into prior to June 9, 2022, will remain in full effect. 

Employers should pay attention to this new law because the civil penalties for violating the Act are significant.  Not only will any non-disclosure and non-disparagement language be void and unenforceable, but employers will be subjected to civil penalties of actual or statutory damages of $10,000, whichever is greater, plus reasonable attorney’s fees and costs.  The types of violations include:

  • Discharge, discriminate, or retaliate against an employee who discloses conduct they reasonably believed to be illegal discrimination harassment, retaliation, a wage/hour violation, or sexual assault;
  • Request or require an employee to enter into an agreement with a prohibited provision; or
  • Attempt to enforce a provision that is prohibited, whether through a lawsuit, a threat to enforce, or any other attempt to influence a party to comply with a prohibited provision.

Washington’s Silenced No More Act Places More Restrictions on Employers Compared to California’s Silenced No More Act

Both Washington and California’s Silenced No More Act[2] have similar provisions prohibiting non-disclosure and non-disparagement terms.  California’s law prohibits provisions as a condition of employment that deny an employee’s right to discuss information about “unlawful acts in the workplace.” It defines unlawful acts by expressly identifying discrimination, harassment, and retaliation, “or any other conduct that you have reason to believe is unlawful.”  Both Washington and California expanded this prohibition to severance agreements. However, this is where the similarities end. 

Turning to settlement agreements, Washington’s prohibition is far broader than its counter-part.  California’s Silenced No More Act, expands on its earlier #MeToo legislation, by prohibiting confidentiality provisions that restricted disclosure of underlying factual information relating to any form of harassment, discrimination, or retaliation.  Conversely, Washington’s version prohibits confidentiality and non-disparagement terms in settlement agreements for all employment-related conduct in violation of the law.  Both Washington and California do not prohibit non-disclosure language drafted to protect trade secrets or other sensitive business information. However, unlike Washington, California requires employers who include non-disclosure language in an employment agreement to include a provision stating:

Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.

California’s version also includes mandatory language that must be in a severance or separation agreement notifying the employee of the right to consult with an attorney and providing a period of at least five business days to consult with the attorney.  This requirement exists regardless of age, unlike the Age Discrimination in Employment Act requirements.  This express language is not required for negotiated settlement agreements but the settlement agreement is still prohibited from having any terms that restrict the non-disclosure of factual information concerning all forms of workplace discrimination, harassment, and retaliation.

Between Washington and California, Where Does Oregon Stand on Prohibition of Non-Disclosure and Non-Disparagement Terms?

Since October 1, 2020, the Oregon Workplace Fairness Act, has been in effect prohibiting non-disclosure, non-disparagement, and no re-hire terms in any settlement or severance agreement where the employer is looking to resolve claims of harassment, discrimination, or retaliation.[3]  Similar to California’s law, Oregon’s Workplace Fairness Act, makes it an unlawful employment practice for an employer to include non-disclosure or non-disparagement provisions that have the purpose or effect of preventing an employee (prospective, current, or former), from disclosing or discussing, discriminatory or harassing conduct. 

Oregon and California share another similarity where in both states employers are restricted from including a no re-hire term in settlement or severance agreements.  California’s prohibition on no re-hire terms applies to all workplace disputes.[4] Whereas, Oregon’s prohibition on no re-hire terms is limited to discrimination, harassment, or retaliation claims.  Both states have an exception where the employer has in “good faith” determined that the employee who filed the claims engaged in discriminatory conduct, harassment, or sexual assault.  Oregon has one other exception where an employee requests the terms be included in the settlement or separation agreement, and the employee has a seven-day revocation period. Currently, Washington has no restrictions on no re-hire provisions in severance or settlement agreements.

Finally, Oregon’s Workplace Fairness Act extended the statute of limitation for filing an administrative action or lawsuit for discrimination and/or harassment, or violations of the Workplace Fairness Act, from one to five years. Under a separate law, California extended the deadline from one to three years to file a complaint with the Department of Fair Employment and Housing (“DFEH”).  Washington’s statute of limitations for discrimination and/or harassment claims remains three years to file a state court action.

The “West Coast” Wave

It is not clear whether the west coast wave will extend eastward, but it is conceivable that other states will follow suit.  This means that there is no escape for employers.  It is clear that west coast employers must review and amend their employment-related agreements by taking out or refining the prohibited language.  Otherwise, they risk significant fines.  Since this may soon not be limited to the west coast, all employers should be following the legislative developments of their respective states and be cognizant of the similarities and differences of each state’s prohibition to ensure compliance.  While many multi-state employers choose to pick the most restrictive law and apply that law uniformly across state lines, that may not be the best solution here, and employers should not make this decision without discussing it with their counsel.

 As this legislation continues to develop, the Gordon & Rees Employment Law group will continue to provide further nationwide updates. 

[1] Engrossed Substitute House Bill 1795 (effective June 9, 2022).

[2] California’s Silenced No More Act, S.B. 331 (effective Jan. 1, 2022).

[3] Oregon’s Workplace Fairness Act currently permits employers to negotiate settlement or severance agreements to include confidentiality as to the settlement amount or fact of settlement.  However, on March 24, 2022, Oregon Governor Kate Brown signed into law an amendment in which confidentiality as to amount and fact of settlement is no longer allowed unless requested by the employee.  The employer is also required to provide a copy of their anti-discrimination policy required under ORS 659A.375 to the person they are intending to enter into an agreement with.  This law is set to go into effect January 1, 2023.  See SB1586 here

[4] California’s prohibition on no re-hire terms became effective in 2020 under Assembly Bill 749.

Employment Law

Nicole E. Demmon
Sarah N. Turner

Employment Law