States continue to pass laws limiting the use of employer nondisclosure agreements (NDAs). On 24 March 2022, Washington Governor Inslee signed House Bill 1795, the Silenced No More Act, into law. The law repeals a 2018 law which only restricted NDAs in cases of sexual harassment or sexual assault, and significantly broadens the scope of prohibited NDAs in the state.
Effective 9 June 2022, the Act prohibits any provision in agreement between and employer and an employee “not to disclose or discuss conduct, or the existence of a settlement involving conduct, that the employee reasonably believed under Washington state, federal, or common law to be 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.”
Under the Act, prohibited nondisclosure and nondisparagement provisions include those contained in employment agreements, independent contractor agreements, agreements to pay compensation in exchange for the release of a legal claim, or any other agreement between an employer and an employee. Employers that request or require an employee to enter into any agreement or attempt to enforce a provision of an agreement prohibited by the law (whether by a lawsuit or any other attempt) is liable in a civil cause of action for actual or statutory damages of USD10,000 or more, as well as attorneys’ fees and costs. For the purposes of this section, an “employee” means a current, former, or prospective employee or independent contractor.
Notably, the Act does not prohibit the enforcement of a provision in any agreement that prohibits the disclosure of the amount paid in settlement of a claim. It also does not prohibit an employer and an employee from protecting trade secrets, proprietary information, or confidential information that does not involve illegal acts.
The Oregon legislature also recently amended its Workplace Fairness Act to broaden its coverage and further restrict the use of NDAs and no rehire provisions.
Effective in 2020, Oregon’s Workplace Fairness Act makes it an unlawful employment practice for an employer to require a current or prospective employee to enter into an agreement that contains a nondisclosure provision that prevents the employee from disclosing or discussing conduct that constitutes discrimination and harassment (including sexual assault) prohibited under state law or that prevents them from seeking reemployment, except in limited circumstances.
If signed by the Governor, Senate Bill 1586 would:
- apply to agreements with former employees in addition to current and prospective employees
- prohibit employers from including a provision that prevents the disclosure of the amount or fact of a settlement in any settlement, separation or severance agreement unless the employee requests such a provision
- prohibit employers from making an offer of settlement conditional upon an employee requesting to include confidentiality or nondisparagement provisions
- require employers to provide a copy of their Workplace Fairness Act anti-discrimination and harassment policy to any person with whom the employer seeks to enter a settlement, separation or severance agreement and
- make any mediation communications in violation of the Act not confidential and admissible as evidence in any judicial or administrative proceeding.
An agreement that contains a prohibited provision would be void and unenforceable. In addition, an employee could file a complaint under ORS 659A.820 for violations of this section and bring a civil action under ORS 659A.885 and recover liquidated damages in the amount of USD5,000 and other relief as provided by ORS 659A.885.
If signed by Oregon Governor Kate Brown, the law would take effect on 1 January 2023.
Source: DLA Piper – Garrett Kennedy