Confidentiality Agreements in Sexual Harassment Cases – Banned if AB 3080 Signed

Shhhh Confidentiality Agreements

Photo by Kristina Flour on Unsplash

It’s difficult as a business owner to know what you need to know in the area of employment law and employee rights without having someone to guide you. The legal landscape is complex and ever-changing. New laws keep getting passed and court decisions could easily turn something that was an acceptable practice into a prohibited practice, forcing employers to scramble to change practices, usually crossing their fingers and hoping that the changes don’t trigger someone to ask whether what you were doing in the past was wrong. Most of the time, you don’t even know what you don’t know.

I’ve often heard business owners say “had I known that I would have done it differently, but no one told me.”

We’re here to tell you.

The California legislature recently passed Assembly Bill 3080 (AB 3080), which is now awaiting Governor Brown’s signature.  The bill has 2 main components.

  1. Bans Confidentiality Agreements Regarding Sexual Harassment Claims

The first responds to the #MeToo movement and the argument that confidentiality agreements in settlements of sexual harassment claims allow harassers to become repeat offenders and shields them as they move from job to job.  If signed by the Governor, a new section 432.4 will be added to the California Labor Code, and would make it illegal to, “as a condition of employment, continued employment, the receipt of any employment-related benefit, or as a condition of entering into a contractual agreement, prohibit any applicant for employment, employee, or independent contractor from disclosing to any person an instance of sexual harassment that the employee or independent contractor suffers, witnesses, or discovers in the workplace or in the performance of the contract, or otherwise opposing any unlawful practice, or from exercising any right or obligation or participating in any investigation or proceeding with respect to unlawful harassment or discrimination.”

Thus, the prohibition against requiring a confidentiality agreement applies to agreements entered into with applicants, employees, and independent contractors.  If passed, this ban will apply to contracts that are entered into, modified, or extended, on or after January 1, 2019.

The promise of confidentiality has significant weight when an employer or defendant agrees to settle sexual harassment claims.  The unintended consequence of this ban could be the disappearance of an incentive for an employer or defendant to settle a claim, or at least, to decrease the value of a settlement in the defense’s eyes.  This will result in more protracted litigation of sexual harassment claims, perhaps forcing victims into publicly adjudicating their claims even if they don’t want it to be public.  On the other hand, this may be a situation where truly voluntary private arbitration may be to both parties’ benefits.  Learn more about what is sexual harassment and how to prevent sexual harassment.

Which brings us to the second part of AB 3080.

  1. Prohibition against mandatory arbitration agreements in employment

AB 3080, if signed into law will also add Section 432.6 to the Labor Code, prohibiting employers from requiring applicants and employee to enter into arbitration agreements or give up their rights any way related to claims of harassment, discrimination, or retaliation under the Fair Employment and Housing Act, as well as wage and hour violations under the Labor Code.

Employers are prohibited from retaliating against and employee or applicant for not agreeing to sign such an agreement.  Thus, in order to be upheld, an employer would have to show that the employee had a choice and that the employee voluntarily opted in to the arbitration agreement.  The bill also opens the door for personal liability for anyone who violates this section.

If Governor Davis signs AB 3080 into the law, we will undoubtedly see a lengthy fight up to the U.S. Supreme Court given that the Court recently held that arbitration agreements will be protected absent specific instructions from Congress otherwise.

Thus, the fight about arbitration agreements continues.

Schedule a call if you have questions about arbitration clauses or employment laws in general. 

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In: Employment Law, Uncategorized

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