Effective with the new year, San Diego and California companies and businesses dealing with sexual harassment cases should be aware of new anti-secret-settlement and anti-confidentiality laws. This article will discuss two new laws – Senate Bill 820 (“SB 820”) and Assembly Bill 3109 (“AB 3109”).

No Secret Settlement Agreements

With respect to SB 820, secret settlement agreements are now banned (unless the victim asks for confidentiality of identity). Previously, when a case was settled, one or both parties asked for and agreed to confidentiality provisions. In general, these provisions prevented either party from talking about the facts of the case, revealing the identity of wrongdoers (and victims), and discussing the amount of the settlement.

However, in August 2018, the California State Assembly passed Senate Bill 820 (“SB 820”) to make such confidentiality provisions unenforceable. See news article here.

Note that SB 820 is not limited to employment-related circumstances. The first clause of the new law states: “… a provision within a settlement agreement that prevents the disclosure of factual information related to a claim filed in a civil action or a complaint filed in an administrative action, regarding any of the following, is prohibited…”

Thus, by its own language, SB 820 applies to settlements of cases that have been “filed” and does not void confidentiality provisions with respect to cases that are settled prior to the case being filed. This will add a significant incentive for early settlement of cases related to sexual harassment, discrimination, and retaliation. The law does not yet apply to other types of harassment, discrimination, and retaliation such as those based on race or gender. However, it is foreseeable that SB 820 could quickly be expanded to cover all other categories.

No Agreements Not to Testify

A related new law — AB 3109 — further undercuts confidentiality and secrecy. AB 3109 creates a new provision in the Civil Code (section 1670.11) that voids any agreement whereby any person agrees not to testify “in an administrative, legislative, or judicial proceeding concerning alleged criminal conduct or alleged sexual harassment …” Note that AB 3109 is very broad applying to any court or administrative proceeding and to testimony before any legislative proceeding. Note further that the law applies to alleged sexual harassment and “alleged criminal conduct.” This is very broad and, going forward, this will be an important statute used to protect whistleblowers.

Not only is AB 3109 very broad, its protections are easily triggered. To void any secrecy provision, all that is required is that a person be “required or requested to attend the proceeding pursuant to a court order, subpoena, or written request from an administrative agency or the legislature …” By its language, a demand that a witness appear for a deposition will be covered by the new statute. A deposition is part of a “court proceeding” and the demand is a form of “written request” and depositions are often initiated or confirmed via subpoena.

What Should Your Business be Doing?

If your business has these types of provisions in your employment, contractor, nondisclosure or other contracts, it is important to have an experienced San Diego corporate attorney review those contracts for compliance with the new laws. Here are a few tips for how to update your contracts:

• Notice provisions are now essential — if not already present, contracting parties should be required to provide notice if they are “required or requested” to provide testimony; this allowed your business to potentially intervene or have representation at the proceeding
• Strengthen other confidentiality aspects of your agreements such as trade secret provisions
• Review and reduce access to sensitive information and data.

Contact San Diego Corporate Law Today

For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email. Mr. Leonard’s law practice is focused on business, transactional, and corporate matters, and Mr. Leonard has been named a “Rising Star” four years running by SuperLawyers.com and “Best of the Bar” by the San Diego Business Journal.

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