Shining a Needed Light on Harassment and Discrimination Claims

The Collective Benefits from California’s Recent Secret Settlement Restrictions

Recently enacted limitations on confidentiality in sexual harassment and sex discrimination settlements embodied in California’s Stand Together Against Nondisclosure (STAND) Act largely eliminate secret settlements that have historically kept survivors of harassment, assault and discrimination from revealing the details of their cases. Propelled by the Me-Too Movement and the alleged abusive behavior of Roger Ailes, Bill O’Reilly, Harvey Weinstein, Steven Wynn and too many others, California last year enacted Code of Civil Procedure (CCP) §1001. As discussed here, CCP §1001 and related new laws have altered the landscape for assessing and mediating sexual harassment and sexual assault claims, with benefits to both employees and employers who act promptly and thoughtfully.

Increased incentives to mediate early

CCP §1001, effective January 1, 2019, prohibits and makes void as a matter of law provisions of settlement agreements that prevent the disclosure of
factual information concerning sexual harassment, assault, discrimination, or retaliation for reporting these claims. CCP § 1001 allows for confidentiality of only the settlement amount, and, if requested by the claimant, the claimant’s identity.

Notably, CCP §1001 confidentiality provisions apply only where the claimant has filed a claim with an administrative agency or in court. Where neither a DFEH/EEOC complaint nor a lawsuit has been filed, settlement confidentiality may be preserved.

Concerns about confidentiality and adverse publicity may have prompted some employers to mediate and settle sex harassment cases before CCP §1001 took effect. Anecdotally, it appears that more cases are being mediated pre-filing, which may be triggered at least in part by the new laws discussed here.

If CCP §1001 has led more employers to mediate pre-litigation, the overall benefits of doing so may well eclipse confidentiality considerations, particularly where a substantial claim has been asserted. It is sad but often true that individuals accused of sex harassment or discrimination – let alone assault – deny the conduct alleged, leaving some employers and insurers to conclude that the claims lack merit. Yet all the more reason to promptly and fully assess the disputed claims aided by a neutral trained to take a dispassionate yet hard look at conflicting assertions, corroborating evidence, and the risks for all concerned of a fully litigated course.

Indeed, the slew of headlines describing alleged repeated predatory behavior by prominent figures pointedly make the case for promptly uncovering and remedying – rather than burying – claims of harassment, assault, discrimination and any related retaliation. A problem buried is often a problem likely to recur, which harms everyone.

Other limits on confidentiality restrictions

Even as to pre-filing settlements, California law now forbids restrictions on a person testifying in other proceedings about alleged sexual harassment or criminal acts. Also enacted as of January 1, 2019, Civil Code §1670.11 declares void any provision in a settlement agreement or contract that purports to waive a person’s right to testify about alleged sexual harassment or criminal conduct when that person has been lawfully compelled or requested to do so. Hence, even more reason to thoroughly and promptly investigate and end any impermissible conduct.

“No-rehire” provisions are no longer lawful with one exception

As also relevant here, Governor Newsom recently signed into law AB 749, which forbids employers from including a “no-rehire” provision in a settlement agreement. As of January 1, 2020, employers may not, as part of a settlement, prohibit or restrict a settling employee who has filed a claim or internal complaint from seeking employment with that employer or its affiliates.

Notably, AB 749 permits, as one exception, a no-rehire provision in a settlement agreement with employees accused of sexual harassment or sexual assault if the employer has made a good faith determination that the accused employee has engaged in the alleged conduct¹ . This exception appears intended to protect employers who thoroughly investigate claims of sex harassment or sexual assault and conclude that accused employee should not be re-hired, let alone retained, following that investigation and determination.

A word of caution: None of AB 749’s exceptions should be read too broadly or lightly, lest employers face additional litigation over whether they adequately investigated and acted in good faith. But taken together, these laws empower employers as well as employees to promptly shine a light on, and for employers to take appropriate steps to remedy, alleged acts of sex harassment and discrimination.

[1] AB 749’s other exceptions permit (a) employers and employees to mutually agree to terminate a current employment agreement in the absence of any pending legal claim, internal complaint or grievance, and (b) employers to refuse to employ or rehire an employee if there is a legitimate, non-discriminatory or non-retaliatory reason for terminating the employment relationship or refusing to rehire the employee.