In the wake of the #MeToo movement, many West Coast states passed laws that encouraged employees to freely discuss workplace sexual harassment and forbid employers from stopping this speech. These laws typically focus on confidentiality, non-disparagement, separation, settlement, and arbitration agreements. But some laws are so broad that they may lead to unintended consequences, and worse yet, result in significant monetary penalties and damages. The trend that began with Washington state’s Silenced No More law has now spread to 14 states, with two more states considering bills. Congress also joined the trend by passing bi-partisan legislation limiting arbitration agreements. Against this backdrop, employers must now know what not to say.
Washington state passed its Silenced No More Act in 2018. See Lane Powell’s previous legal updates found here and here. In 2019, California followed suit. See our previous legal update here. Later that year, Oregon passed its Workplace Fairness law. Legislatures in Hawaiʻi, Illinois, Louisiana, Maryland, Nevada, New Jersey, New Mexico, New York, Oregon, Tennessee, Vermont, and Virginia have also passed legislation. On a national level, Congress passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act. This law amended the Federal Arbitration Act to void arbitration agreements and joint action waivers that purport to apply to claims of sexual assault and harassment. See our legal update regarding this topic here. The broad sweep of these laws will no doubt create compliance challenges, especially for multi-state employers. Indeed, state laws are not uniform in their prohibitions, coverage, and exceptions, and some impose steep penalties for noncompliance.
For example, Washington’s law applies to agreements that limit disclosure of facts that an employee “reasonably believes constitute illegal discrimination, illegal harassment, illegal retaliation, a wage and hour violation, or sexual assault, or that is recognized as against a clear mandate of public policy.” Washington’s law also applies to current, former, and prospective employees and independent contractors. Washington’s law may also have implications on employers’ ability to require confidentiality during workplace investigations.
Oregon’s law applies to former employees and limits mediators who are mediating harassment or discrimination claims. California’s law originally applied to claims for sexual discrimination, assault, and harassment, but was expanded to apply to claims for any kind of discrimination or harassment in employment or housing.
Some of the state laws also mandate magic language be used in agreements and policies. California’s law requires that waivers inform the employee of their right to seek legal guidance, and requires employers to give employees at least five business days to consider the agreement before signing. Oregon’s law requires that employers adopt and distribute a written policy informing employees of the Workplace Fairness Act’s requirements, and provide the policy to newly hired employees and anyone who files a complaint.
Exceptions to these laws also vary across states. California, Oregon, and Washington’s laws contain exceptions for trade secrets and proprietary business information. Both Washington and California’s laws permit employers to maintain confidentiality regarding the settlement amount. But Oregon’s law only permits such a prohibition when requested by the aggrieved employee and only if the agreement contains a seven day revocation period and does not involve a public employee that has engaged in the discriminatory, harassing, or retaliatory conduct. California’s law similarly permits confidentiality provisions that protect identifying information at the request of a claimant, as long as the other party is not a government agency or public official.
Non-compliance costs and penalties also vary. Washington and Oregon’s laws impose monetary sanctions, but others do not. Washington’s 2022 amendment to its Silenced No More Act imposes penalties equal to “actual or statutory damages of $10,000, whichever is more,” and reasonable attorneys’ fees and costs. Oregon’s law imposes a $5,000 penalty, but permits courts to award additional damages, including punitive damages. California permits an aggrieved party to make a motion for fees, including under any contractual fee provision contained in the challenged agreement.
What Should Employers Do Now?
- Review your standard employment agreements to ensure they are compliant with requirements in the states where your employees are working;
- Ensure your employee handbook policies comply with these new laws;
- Review separation and settlement agreements to ensure compliance with applicable state and federal laws limiting confidentiality;
- Evaluate your arbitration agreement in light of the federal exceptions for sexual harassment and assault claims; and
- Consult legal counsel with any questions or uncertainties, especially when terminating employment and offering a separation agreement.