Employment, Separation,
and Settlement Agreements:
Limitations on Condentiality
and Non-Disparagement Clauses
California laws prohibit certain terms in employment, separation, and
settlement agreements between employers and employees, former
employees, and job applicants. These laws aim to ensure that individuals
are able to speak out about discrimination, harassment, and other types
of unlawful conduct in the workplace. This document contains answers
to common questions about these laws. This guidance only addresses
the requirements of Government Code section 12964.5 and Code of Civil
Procedure sections 1001 and 1002.5, and does not address other limitations.
EMPLOYMENT AGREEMENTS
Sometimes employers ask employees to sign agreements as a condition of employment.
There are restrictions on what these agreements may include. The following three
questions address what is allowed and what is not allowed in employment agreements
under Government Code section 12964.5.
1
Can an employment agreement prohibit an employee from talking about
discrimination, harassment, retaliation, or other unlawful acts at work?
No. If an employment agreement contains a “non-disparagement” clause, it cannot
stop the employee from speaking about discrimination, harassment, retaliation, or
other “unlawful acts” at work.
1
Unlawful acts include, but are not limited to, acts that an
employee reasonably believes to be unlawful.
2
If the employment agreement contains a
non-disparagement clause, it must state the following (or something substantially similar):
“Nothing in this agreement prevents you from discussing or disclosing information
about unlawful acts in the workplace, such as harassment or discrimination or any other
conduct that you have reason to believe is unlawful.”
3
If a non-disparagement clause in an
employment agreement violates these rules, the clause is unlawful and unenforceable, and
the employer violates the Fair Employment and Housing Act.
4
• Example: The following non-disparagement clause would be unlawful under
Government Code section 12964.5: “Employee agrees that she will not make any
statement, directly or indirectly, verbally or in writing, that would cause harm or
embarrassment to the Company.”
1 Gov. Code § 12964.5(a).
2 Gov. Code § 12964.5(c).
3 Gov. Code § 12964.5(b).
4 Gov. Code § 12964.5(a).
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Employment, Separation, and Settlement Agreements:
Limitations on Condentiality and Non-disparagement Clauses
2
Can an employment agreement include language requiring a job
applicant or employee to give up claims or rights in exchange for
employment or an employment benefit?
No. An employment agreement cannot require an employee to give up their rights or
their claims against the employer in exchange for employment, continuing employment,
a raise, or a bonus.
5
Further, an employment agreement cannot require an employee to
state that they do not have any injuries or claims against the employer.
6
• Example: The following language in an employment agreement would be unlawful
under Government Code section 12964.5: “Employee hereby acknowledges that
continued employment is contingent upon a release of both current and future
claims against the Company, known and unknown, including any claims under
the California Fair Employment and Housing Act. By signing below, Employee
acknowledges the above and agrees to release any such existing or future claims.”
In addition, an employment agreement cannot require an employee to release
their right to file a court or administrative complaint, or to notify a state agency, law
enforcement agency, or any other governmental entity about complaints against the
employer.
7
• Example: The following provision in an employment agreement would be unlawful
under Government Code section 12964.5: “In the event Employee believes they
have been subjected to discrimination, harassment, retaliation, or other unlawful
conduct, Employee agrees that they shall not report any such alleged conduct to a
state or federal administrative department or agency, including the California Civil
Rights Department. In the event a state or federal administrative department or
agency contacts Employee regarding alleged unlawful conduct against Employee
or another individual employed by the Company, Employee agrees not to grant an
interview with or provide testimony before any such department or agency.”
Any provision in an employment agreement that violates these rules is unlawful and
unenforceable, and the employer violates the Fair Employment and Housing Act.
8
3
Can an employment agreement prohibit the employee from disclosing
the employer’s “trade secrets” or other proprietary information?
Yes. An employment agreement may prohibit the employee from disclosing the
employer’s trade secrets, proprietary information, or confidential information that is
unrelated to unlawful acts in the workplace.
9
5 Gov. Code § 12964.5(a).
6 Gov. Code § 12964.5(a).
7 Gov. Code § 12964.5(a).
8 Gov. Code § 12964.5(a).
9 Gov. Code § 12964.5(f).
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SEPARATION AGREEMENTS
Sometimes when an employee is separating from employment (leaving a job), the
employer and employee work out a separation agreement. These are also known as
severance agreements. There are restrictions on what these agreements may include.
The following five questions address what is allowed and not allowed in separation
agreements under Government Code section 12964.5.
4
Can a separation agreement prohibit a separating employee from talking
about discrimination, harassment, retaliation, or other unlawful acts at
work?
No. If a separation agreement contains a “non-disparagement” clause, it cannot stop
the employee from speaking about discrimination, harassment, retaliation, or other
“unlawful acts” at work.
10
Unlawful acts include, but are not limited to, acts that an
employee reasonably believes to be unlawful.
11
If the separation agreement contains a
non-disparagement clause, it must state the following (or something substantially similar):
“Nothing in this agreement prevents you from discussing or disclosing information about
unlawful acts in the workplace, such as harassment or discrimination or any other conduct
that you have reason to believe is unlawful.”
12
• Example: The following non-disparagement clause would be unlawful under
Government Code section 12964.5: “Former Employee agrees that they will not make
any statement, directly or indirectly, verbally or in writing, that would cause harm or
embarrassment to the Company.”
If a non-disparagement clause in an separation agreement violates these rules, the clause
is unlawful and unenforceable, and the employer violates the Fair Employment and
Housing Act.
13
5
Can a separation agreement include a general release and waiver of
claims in a separation agreement?
Yes. Assuming the release is otherwise lawful and valid, an employer may include a general
release or waiver of claims related to an employee’s separation from employment.
14
6
Can an employer require a separating employee to sign a separation
agreement on the same day it is oered?
No. An employer oering a separation agreement to an employee must both (1) notify the
employee of their right to consult an attorney about the agreement and (2) provide the
employee at least five business days to do so.
15
10 Gov. Code § 12964.5(b).
11 Gov. Code § 12964.5(c).
12 Gov. Code § 12964.5(b).
13 Gov. Code § 12964.5(b).
14 Gov. Code § 12964.5(b).
15 Gov. Code § 12964.5(b).
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CRD-E16P-ENG / November 2022
Employment, Separation, and Settlement Agreements:
Limitations on Condentiality and Non-disparagement Clauses
7
Can a separation agreement prohibit the employee from disclosing the
employer’s “trade secrets” or other proprietary information?
Yes. A separation agreement may prohibit the former employee from disclosing the
employer’s trade secrets, proprietary information, or confidential information that is
unrelated to unlawful acts in the workplace.
16
8
Can a separation agreement prohibit the employer and employee from
disclosing the amount paid by the employer to the employee?
Yes. A separation agreement may prohibit disclosure of the amount paid in a severance
agreement.
17
SETTLEMENT AGREEMENTS
When someone files a complaint with CRD, another agency, or in court against an
employer, or notifies the employer that they have a complaint prior to filing it, the law
restricts which terms can be included in an agreement to settle the complaint. The
following five questions address what is allowed and what is not allowed under California
Code of Civil Procedure sections 1001 and 1002.5.
9
Can a settlement agreement prohibit the employee or job applicant
from disclosing factual information related to unlawful discrimination
and harassment?
No. A settlement agreement that resolves a CRD or other administrative complaint or a
court case cannot restrict or prevent the complainant/plainti from disclosing factual
information related to any of the following:
• An act of sexual assault;
• An act of workplace harassment or discrimination based on race, religious creed,
color, national origin, ancestry, physical disability, mental disability, medical
condition, genetic information, marital status, sex, gender, gender identity, gender
expression, age, sexual orientation, veteran or military status, or any other
characteristic(s) protected by the Fair Employment and Housing Act;
• Failure to prevent an act of workplace harassment or discrimination based on any
characteristic(s) protected by the Fair Employment and Housing Act; or
• An act of retaliation against a person for reporting or opposing harassment or
discrimination based on any characterstic(s) protected by the Fair Employment and
Housing Act.
18
Any settlement agreement that restricts or prohibits any of these disclosures is unlawful
and unenforceable.
19
16 Gov. Code § 12964.5(f).
17 Gov. Code § 12964.5(e).
18 Code Civ. Pro. § 1001(a).
19 Code Civ. Pro. § 1001(d).
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Employment, Separation, and Settlement Agreements:
Limitations on Condentiality and Non-disparagement Clauses
10
Can a settlement agreement prohibit a party from disclosing the
amount of the settlement?
Yes. A settlement agreement may prohibit disclosure of the amount paid in a settlement
agreement.
20
11
Can a settlement agreement prohibit a party from disclosing the
identity of the complainant or plainti?
Yes. A settlement agreement may prohibit disclosure of the identity of the complainant/
plainti as well as facts that could lead to the identification of that person.
21
However, that
is lawful only if (1) it is at the request of the complainant/plainti and (2) a government
agency or public ocial is not a party to the settlement.
22
12
Can a settlement agreement include a “no-rehire clause”?
Usually, no. According to California Code of Civil Procedure section 1002.5, clauses in
settlement agreements that prohibit, prevent, or restrict an individual from obtaining
future employment with an employer against whom they have asserted a claim are
unlawful and unenforceable, unless either of the following apply:
• The employer has determined in good faith that the individual engaged in sexual
harassment or sexual assault; or
• A legitimate, non-discriminatory reason exists for terminating and refusing to rehire
the individual.
23
If you think you have been a victim of employment discrimination, please contact CRD.
TO FILE A COMPLAINT
Civil Rights Department
calcivilrights.ca.gov
Toll Free: 800.884.1684
TTY: 800.700.2320
Have a disability that requires a reasonable accommodation?
CRD can assist you with your complaint.
For translations of this guidance, visit: www.calcivilrights.ca.gov/posters/employment
20 Code Civ. Pro. § 1001(e).
21 Code Civ. Pro. § 1001(e).
22 Code Civ. Pro. § 1001(c).
23 Code Civ. Pro. § 1002.5.
Employment, Separation, and Settlement Agreements:
Limitations on Condentiality and Non-disparagement Clauses
This guidance is for informational purposes only, does not establish
substantive policy or rights, and does not constitute legal advice.
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