In the face of a continuing wave of highly publicized complaints of sexual misconduct in the workplace, California state senator Connie M. Leyva introduced Senate Bill 820.  If passed, this law would prohibit the inclusion of nondisclosure terms in settlement agreements relating to actions alleging claims of sexual harassment or discrimination in the workplace.

California law currently prohibits parties to civil actions seeking damages for certain sexual offenses from including in their settlement agreements any terms preventing the disclosure of factual information related to the action.  As it relates to the workplace, SB 820 would broaden that law by including actions seeking civil damages for sexual assault, sexual harassment, or workplace harassment or discrimination based on sex or failure to prevent an act of workplace harassment or discrimination based on sex.  Unlike existing law, however, SB 820 would permit the inclusion of nondisclosure terms upon the request by the complaining party.

While introduced to address legitimate and reasonable concerns about sexual harassment in the workplace, SB 820 would cause a dramatic shift in the way California employers handle pre-litigation sexual harassment and discrimination complaints by employees.  For example, because the new law would apply only to settlements reached after litigation has commenced, it would pressure employers to settle these types of lawsuits pre-litigation, thereby increasing the value for factually questionable claims.  To the extent a lawsuit is filed, the new law could also potentially deter employers from settling these types of claims due to the public nature of such settlements.

Whether you are an employee or an employer, SB 820 is a law to keep an eye on as it progresses through the legislative process.  Even if it fails to pass, however, California employers must take steps to tackle issues regarding workplace harassment by ensuring that their employees are properly trained in proper workplace conduct and in how to handle and address employee complaints.