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You may have signed an NDA without giving it much thought. Months or even years later, something happens that leaves you wondering whether that agreement took away your right to file a lawsuit. Before you assume the answer is yes, take a closer look. California law places important limits on some confidentiality agreements. These limits are particularly important for lawsuits involving workplace discrimination, harassment, retaliation, and sexual assault. If you're considering an NDA lawsuit, understanding those exceptions is an important place to start.
There are certain times when someone wants to keep specific information private. Individuals and companies use non-disclosure agreements (NDAs) to give themselves protection. An NDA is a type of contract where one or more parties agree to keep information a secret. Most NDAs are legal and enforceable when they protect legitimate confidential information.
A company could require employees to sign an NDA to protect trade secrets, client lists, or proprietary processes. An individual could use an NDA to keep a settlement agreement confidential or protect personal information.
While every situation is different, an NDA generally cannot stop you from pursuing civil litigation. This is a separate action from revealing confidential information. The NDA doesn’t take away someone’s right to file a lawsuit, report illegal conduct, or cooperate with government investigations. In short, an NDA cannot be used to shield someone or a business from illegal activity or actions that would create legal liability.
Many employees sign workplace documents without thinking twice about the language tucked inside them. California law recognizes that some of those agreements can unfairly discourage people from reporting unlawful conduct. Government Code Section 12964.5 places limits on the agreements employers ask workers to sign before disputes arise. In general, employers cannot require employees to waive their ability to discuss unlawful workplace conduct, including discrimination, harassment, retaliation, and other violations covered by FEHA.
These protections apply when employers ask new hires and current employees to sign agreements. The employee's signing of the NDA needs to be in exchange for a benefit to the employee. That benefit could be continued employment, a raise, or some other benefit of material value. The goal is to prevent employers from using their position of power to pressure employees into signing unfavorable or unenforceable NDAs. Employers shouldn’t be able to use NDAs to keep an employee’s allegation of unlawful conduct from becoming public.
Not every confidentiality provision included in a settlement agreement is enforceable under California law. Generally, NDA provisions are unenforceable if they prevent someone from talking about the facts of a claim involving one of these issues:
Lawmakers increased these protections by passing the Silenced No More Act. They recognized that illegal activity shouldn’t be kept secret simply because a case settles.
However, this doesn’t mean every part of a settlement becomes public. The parties may still agree to keep the settlement amount confidential. A person bringing the claim may also request that their identity remain private. The goal is to protect individuals who want privacy while preventing employers or other parties from using NDAs to keep allegations of unlawful conduct out of public view.
Although California limits NDAs in both situations, the laws are not identical. Sexual assault cases often involve allegations that someone committed sexual assault, which may lead to criminal charges, a civil lawsuit, or both. When these claims are resolved through a settlement, California generally does not allow confidentiality provisions that prevent someone from discussing the facts surrounding the alleged assault.
Workplace discrimination cases involve a different type of legal claim. Instead of focusing on criminal conduct, they typically involve allegations that an employer violated employment laws by discriminating or retaliating against an employee. These claims may involve race, age, disability, pregnancy, religion, gender, sexual orientation, or another protected characteristic.
California also goes a step further in employment matters. In addition to limiting confidentiality in certain settlements, state law restricts employers from requiring employees to sign agreements that silence them about unlawful workplace conduct before a dispute even arises. While both laws promote openness, they apply to different agreements and different stages of the legal process.
California law doesn’t totally prevent the use of NDAs. They can still be enforceable to protect intellectual property, trade secrets, customer information, proprietary technology, and business strategies. Generally, these are all pieces of information that are directly related to the business’s operations. California views NDAs in this capacity as an important business tool.
Every NDA is different. Each one is written to protect a specific set of information. Because of this, it’s crucial to thoroughly read and understand the entire NDA before signing. When practicing law, wording is crucial. The language used in the NDA will directly impact what rights you have. When you sign, the conditions of the signing and the terms included will impact how the NDA can be enforced. Even an NDA that seems simple on the surface can have a significant impact.
Similar to any other contract, it’s good practice to have a lawyer read it before signing. When you hire a lawyer, their legal experience will give you the guidance you need to understand what you are agreeing to. A lawyer can explain the terms and potential legal impact.
While NDAs remain valuable tools for protecting legitimate confidential information, they cannot always be used to shield unlawful conduct. California's laws create important exceptions that may allow someone to pursue a lawsuit despite signing a confidentiality agreement. At ADZ Law, LLP, the attorneys help clients evaluate employment agreements, settlement terms, and potential legal claims with clear, straightforward guidance.
Reach out today to discuss your situation and learn about your legal options.
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