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New California Law: Time to Revise Your San Diego Nondisparagement Clauses

Given the importance of business reputation, many employers have been insisting on nondisparagement clauses in their employment contracts. Many others have promulgated nondisparagement policies and have included them in their Employee Handbooks. Without such clauses, there are many risks with websites like Glassdoor and Yelp and other social media platforms.

What are Nondisparagement Clauses?

A typical nondisparagement clause might read something like this:

“EMPLOYEE agrees and understands that the COMPANY’S business reputation is both important and commercially valuable. EMPLOYEE agrees to protect the COMPANY’S business reputation and, both during and after the term of employment, EMPLOYEE shall not publish any oral or written statements that are negative, disparaging or derogatory about the COMPANY or which place the Company in a negative light before the public.”

As can be seen, such clauses are intended to protect the company’s reputation and the goodwill created by advertising and good customer service. Often these clauses will reference social media websites and will include non-disparagement of officers, directors, employees, managers and others.

The New California Law

However, a new law taking effect at the beginning of 2019 necessitates that these clauses be evaluated and potentially rewritten. In September 2018, the California State Assembly passed Senate Bill 1300 which amended the Fair Employment & Housing Act (“FEHA”) to make it unlawful for any employer to require an employee to sign a nondisparagement agreement or other document “… that purports to deny the employee the right to disclose information about unlawful acts in the workplace, including, but not limited to, sexual harassment.” The new law defines “information about unlawful acts in the workplace” to include information pertaining to “any other unlawful or potentially unlawful conduct.”

As can be seen, the law is very broad and, like other new laws, this will have significant application beyond sexual harassment cases. The new law will be codified at Cal. Gov. Code, § 12964.5. See here.

The concern is that the new law will void an entire nondisparagement provision for all purposes. To prevent this, your employment contracts, policies and Employee Handbook should be drafted or reviewed by an experienced San Diego corporate attorney. Language may be added either referencing section 12964.5 as an exclusion/exception or otherwise excluding disclosure about “unlawful acts” from your nondisparagement clauses. Your contracts may also contain severability clauses which will allow the nondisparagement clauses to operate for all other purposes.

The new Section 12964.5 also makes it unlawful to require an employee to sign a statement that the employee does not have any FEHA claims or to release any FEHA claims.

Contact San Diego Corporate Law

For further information, please contact Michael Leonard, Esq. of San Diego Corporate Law. Mr. Leonard has the experience to help draft and implement employment agreements and all other types of business contracts. Mr. Leonard has been named a “Rising Star” four years running by and “Best of the Bar” by the San Diego Business Journal. Contact Mr. Leonard via email or by calling (858) 483-9200.

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Schedule a Consultation: 858.483.9200