"Silenced No More"—Sweeping New Washington Law Lifts the Gag on Employment, Settlement, and Severance Agreements

On March 24, 2022, Washington Governor Jay Inslee signed "Silenced No More," E.S.H.B. 1795, a sweeping bill that applies to employment, settlement, and severance agreements and prohibits attendant nondisclosure or nondisparagement provisions which restrict employees from disclosing or discussing violations of clear mandates of public policy, discrimination, harassment, retaliation, and wage and hour infractions.

The Silenced No More Foundation heavily championed the draft legislation, which California also recently adopted, and trade groups staunchly opposed. Employers should update employment-related agreements with nondisclosure or nondisparagement terms now to avoid hefty statutory damages later for noncompliance of $10,000 or actual civil damages, whichever is greater.

The law is effective June 9, 2022.

What Employers Need to Know

Amid #MeToo, Washington previously passed S.B. 5996 which restricted employers from requiring that, as a condition of employment, employees sign a nondisclosure agreement which restricted their ability to disclose workplace sexual harassment and assault. But "Silenced No More" goes further.

Not only are most employment-related agreements covered—including settlement and severance agreements—many types of employment-related claims encompassing a wider range of workplace conduct must remain open for disclosure and discussion, acutely limiting the use of common nondisclosure and nondisparagement provisions.

Specifically, employers should note that the law:

• Covers Most Employment-Related Agreements
  Most employment-related and independent contractor agreements entered into between an employer and a prospective/current/former employee or independent contractor are covered. Notably, this also includes employment-related settlement and severance agreements—though a term prohibiting the disclosure of the amount paid to resolve the matter is still permitted.
• Permits Employees to Disclose/Discuss Many Types of Workplace Conduct, Limiting Use of Nondisclosure/Nondisparagement Provisions
  Any provision in an employment-related agreement that prevents the employee from disclosing or discussing conduct that the employee "reasonably believes" constitutes a violation of public policy, discrimination, harassment, retaliation, or a wage and hour infraction, is prohibited. This includes a wide array of conduct arising in the workplace and at work-related events coordinated by the employer, between the employer or an employee, or between employees, regardless if it occurred on the physical premises.
• Maintains Confidentiality for Trade Secrets
  Employers, however, may still use nondisclosure agreements to safeguard and prohibit disclosure of confidential information, proprietary information, or trade secrets.
• Prevents Forum Shopping/Choice of Law
  To be compliant, an employment-related nondisclosure or nondisparagement agreement, if entered into by a Washington resident, must be governed by Washington law.
• Is Retroactive
  Effective June 9, 2022, an employer-employee agreement that limits the employee's ability to disclose or discuss covered conduct previously entered into during the course of or at the outset of employment will be void and unenforceable. This does not apply to employment-related settlement or severance agreements previously entered into—any attendant nondisclosure or nondisparagement provisions will remain effective.
  However, employers need not update existing employment agreements to strike offending provisions—employers will only be in non-compliance and liable for applicable penalties if they attempt to enforce any forbidden terms after the effective date.
• Prohibits Retaliation
  As might be expected, employers are strictly prohibited from taking an adverse action against an employee for disclosing or discussing covered conduct.
• Strictly Forbids Employers From Attempting to Enforce Offending Provisions
  Employers are prohibited from both requiring or requesting that an employee enter into a non-compliant nondisclosure or nondisparagement provision and attempting to enforce one either through a lawsuit, a threat to enforce, "or any other attempt to influence a party to comply with a provision in any agreement that is prohibited."
• Carries Heavy Civil Penalties
  An employer who requires or requests that an employee enter into a prohibited nondisclosure or nondisparagement agreement or attempts to enforce one may be liable for statutory damages of $10,000 or actual civil damages, whichever is greater, as well as reasonable attorneys' fees and costs.

Next Steps for Employers

Given that "Silenced No More" is effective June 9, 2022, employers should verify compliance now to avoid the risk of any penalties later. Specifically, employers should:

• Analyze employment agreements to identify any nondisclosure or nondisparagement provisions that are not compliant with the new law.
• Exercise care to assess which employment agreements must be revised—some nondisclosure or nondisparagement provisions may be retained to preserve rights over protectable interests.
• Assess employee severance agreements to avoid nondisclosure or nondisparagement provisions that are not compliant with the new law.
• Consider if employee settlement agreements entered into to resolve legal claims may permissibly be subject to nondisclosure or nondisparagement terms.
• Stop any efforts to enforce employment terms not to disclose or discuss covered conduct previously entered into. Again, employers may still enforce settlement and severance agreements and attendant terms, however, entered into prior to the effective date.

For more information on "Silenced No More" or more generally on employment-related nondisclosure or nondisparagement agreements, please contact a Davis Wright Tremaine employment attorney.