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Even So-Called Private Settlements Can Be Made Public

Recent events surrounding the unsealing of a private agreement shine a light on how the details in civil lawsuits can enter the public domain. This possibility is also true in civil suits in employment law cases.

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Employers and employees should know that past agreements can come to light. In addition, states are passing laws that prohibit settlement agreements from containing nondisclosure clauses to hide the elements of any workplace harassment and discrimination.

Let’s look at two specific cases currently making headlines.

Unsealing a Settlement Agreement

On the heels of the conviction of Jeffrey Epstein’s accomplice Ghislaine Maxwell on sex trafficking and other charges, a 2009 agreement between the disgraced Epstein and one of his accusers was unsealed on Jan. 3, 2022.

The accuser, Virginia Giuffre, says that Epstein arranged for her to have sex with men when she was a minor. The now-unsealed settlement shows that Giuffre agreed to end her lawsuit in exchange for $500,000 and other “valuable consideration.”

Famed attorney Alan Dershowitz had wanted the agreement unsealed after Giuffre made a battery claim against him. She later dropped the lawsuit because, according to Dershowitz, the 2009 settlement released him and others from liability.

Two district judges ruled in December that there was no good cause to continue to keep the agreement sealed. The settlement is now in the public domain.

Some terms in the agreement do seem to absolve other potential defendants from facing a lawsuit by Giuffre. Regardless, she filed a lawsuit in August 2021 against Britain’s Prince Andrew, saying he sexually assaulted her when she was 17. He has denied any wrongdoing. Dershowitz believes the lawsuit against the prince will be dropped because of the 2009 settlement.

Silenced No More Act

California passed legislation in 2018 that prevented employers from imposing nondisclosure agreements (NDAs) in settlements related to claims of sexual harassment or sex-based discrimination. The Stand Together Against Non-Disclosure Act (STAND) took effect on Jan. 1, 2019. The Silenced No More Act of 2021 broadens the restriction to harassment or discrimination on any protected class, not just sex/gender. The expanded law went into effect on Jan. 1, 2022. The act covers all such claims made in a civil or administrative complaint.

Protected characteristics in California include the following:

The California law does provide for exceptions. NDAs can still be used when that is the employee’s preference. The claimant’s identity will be protected at their request. Settlement agreements can prevent the disclosure of amounts paid. Claims not filed with a court or administrative agency can remain confidential.

New York passed similar legislation in 2019 that expanded its New York State Human Rights Law. The 2019 law prohibited the use of nondisclosure provisions in agreements that settled harassment or discrimination claims against any protected class. The Empire State law is broader in that it applies to more than civil and administrative actions. The law also covers complaints made internally at a company or through an attorney. Like the California law, a complainant in New York can request that the settlement remain private.

Experienced Legal Counsel for Evolving Employment Laws

California employers are affected by the new law beyond harassment claims. Separation agreements must also inform the employee of their right to an attorney. The employee is provided at last five days to hire counsel if they wish. Severance agreements can be confidential as long as no illegal provisions are involved. Employers should revise any standard offer letters, settlement agreements, and other templates to reflect the changes.

At Shellist Lazarz Slobin, we focus on employment law as it relates to employees, employers, and executives.

If you want to better understand when confidentially agreements can and cannot be imposed, schedule a consultation with one of our experienced attorneys. We have two convenient Southern California offices, one in Los Angeles and another in San Diego.

Contact us today at (713) 352-3433.