California Imposes Significant New Restrictions On Severance And Settlement Agreements
October 20, 2021
California Governor Gavin Newsom has signed Senate Bill (SB) No. 331into law. SB 331 amends the California Code of Civil Procedure and the California Fair Employment and Housing Act (FEHA). The law takes effect on January 1, 2022; the law will not apply to agreements entered into January 1, 2022.An employer must give an employee or former employee at least five days to consider a severance agreement the employer offers the employee. The employee may sign it sooner than five days if the employee wishes. An employer also must notify an employee or former employee to whom the employer offers a severance agreement that the employee has the right to consult an attorney regarding the severance agreement. A settlement agreement may not prevent or restrict an individual from disclosing factual information relating to all claims of harassment, discrimination, or retaliation. A non-disparagement provision in a severance or settlement agreement that releases a FEHA claim or right must notify the employee that the agreement does not prohibit the employee from discussing or disclosing unlawful acts in the workplace.
