US Legislators Reacting to #MeToo

US Legislators Reacting to #MeToo

American jurisdictions, notably, California and New York have passed laws dealing with non-disclosure covenants and in the case of New York, the mandatory arbitration of sexual harassment cases. Will Canadian legislators follow?

Non-Disclosure Term Void in California

The State of California has, as of January 1, 2019, implemented new legislation designed to limit an employer’s ability to keep the allegations of sexual harassment confidential, even in the case of a settlement. The new law applies to contracts made on this date or following and is not retrospective.

The law[1] will deal with contracts including employment agreements, settlement terms, and generally speaking, any type of contract which intends to prevent a person from testifying about alleged criminal conduct or sexual harassment.

The new laws make void any term waiving the right to testify about the alleged criminal conduct, including acts of sexual harassment and also any provision which prevents disclosure of information about sexual harassment and other illegal workplace conduct.[2]

The Specifics

By Civil Code 1670.11any contractual term which prevents a person from testifying about alleged criminal conduct or sexual harassment is void, when the person has been compelled to do so.

By Civil Code 1001, any agreement which settles a civil or administrative case cannot purport to prevent a person from disclosing “factual information” about acts of sexual harassment or retaliatory conduct related to same. This being said, a settlement agreement due to a threatened lawsuit or administrative complaint, may still contain such a covenant of non-disclosure.

The FEHA[3] has also been amended to preclude the employer from releasing all FEHA claims as a term of employment or raise.

All this being said, the injured party may request that there is such a confidentiality term. In this event, the parties may jointly agree to prevent the disclosure of “all facts” which would lead to the revelation of the complainant’s identity. This exception does not apply where the opposing party is a government agency or public official.

In addition, the sum paid may be protected by this covenant.

New York State Limits Non-Disclosure Term & Arbitration

New York law now also precludes a settlement agreement involving a sexual harassment claim from including a confidentiality or non-disclosure provision.[4]

New York law also, as of July 11, 2018, voided any agreement mandating arbitration of any claim of sexual harassment.[5]

Federal Law

There is a parallel term pursuant to the Federal Tax Cuts and Jobs Act of 2017 which also deals with such non-disclosure terms. This statute does not void such a provision but does deny the right of either party to deduct litigation expenses such as legal fees and indeed the settlement sum itself.

In addition, there is a bill pending in Congress, known as Ending Forced Arbitration of Sexual Harassment Act of 2017 (HR 4734, S 2203), which is intended as an amendment of the Federal Arbitration Act. This bill would render void any pre-dispute contract which mandates arbitration of any sexual discrimination or harassment claims recognized under Title VII. [6]


[1] Known as the STAND (Stand Together Against Non-Disclosure) Act

[2]This applies to contracts relating to sexual assault, sexual harassment, or sex discrimination.

[3] Fair Employment & Housing Act

[4] There is an exception where the complainant requests this.

[5] There is an exception for union arbitrations

[6] As above.

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