New California Law Limits Some Workplace Secret Settlements

The Capitol Building in downtown Sacramento.
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A new law in California bans secret settlements in most harassment and discrimination cases, expanding a signature reform of the #MeToo movement that guarantees workers can publicly call out their bosses for bad behavior without fear of losing pay or other benefits.

Companies don't like to have their reputations sullied in public, so they often require their employees to keep quiet when they settle harassment or discrimination cases by making them sign a nondisclosure agreement. Such agreements came under scrutiny during the #MeToo movement as a way to isolate victims and shield serial offenders from consequences.

A 2018 law banned secret settlements in California for cases involving sexual harassment, discrimination or assault. Thursday, Gov. Gavin Newsom signed a new law that bans these settlements for other types of discrimination cases, including those involving race, religion, gender and sexual orientation.

Sen. Connie Leyva, a Democrat from Chino who authored the law, dubbed it the “Silenced No More Act.”

“The California State Legislature and Governor Newsom have now spoken: California workers should absolutely be able to speak out — if they so wish — when they are a victim of any type of harassment or discrimination in the workplace,” Leyva said in a statement Thursday. “It is unconscionable that an employer would ever want or seek to silence the voices of survivors that have been subjected to racist, sexist, homophobic or other attacks at work."

Other states, including Arizona, New Jersey, New Mexico and Tennessee, also have laws that ban nondisclosure agreements in sexual harassment cases. But Leyva's office has said California is the first state to ban these nondisclosure agreements as part of severance packages when a worker leaves the company.

The law is significant in California, home to some of the world's largest and most influential technology companies. The legislation was inspired in part by two Black women who accused Pinterest, the San Francisco-based social media company, of wage discrimination and retaliation.

The women, Ifeoma Ozoma and Aerica Shimizu Banks, settled their complaints and left the company. But when they decided to speak publicly about their experiences, California law only protected them if they spoke about the gender discrimination portion of their complaint, not the racial discrimination.

Pinterest's co-founder and CEO has said he supports the law.

California's law has some exceptions. Companies would still be required to keep employee's names secret and not release any information that could identify them, but only if the employee asks companies to do that. The law says companies can't require employees to keep quiet.

Copyright AP - Associated Press
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