Workplace discrimination and harassment complaints are often resolved through private settlement agreements that include non-disclosure or non-disparagement provisions. In addition, many employers include such provisions in their standard employment agreements. In recent years, several states have enacted laws designed to prohibit or limit the use of such provisions. In June 2022, Washington State passed one of the broadest statutes governing these issues, as compared to California, New York, and New Jersey, each of which has enacted laws limiting the provisions in recent years.
Background on Non-Disclosure and Non-Disparagement Provisions in Employment Agreements
Before discussing these laws, we will briefly explain the nature of non-disclosure and non-disparagement provisions in employment contracts or settlement agreements. Non-disclosure provisions prevent employees who sign these agreements from sharing information with any third party, often with exceptions for a small subset of individuals, usually the employee’s spouse, mental health professionals, and tax, legal, and financial advisors. In the case of settlement agreements where an employee has asserted employment-related claims, the information that cannot be shared under a non-disclosure provision typically includes both the terms of the agreement and any information related to the employee’s claim. Non-disparagement provisions, whether in an employee handbook, contract, or settlement agreement, prohibit an...
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