Federal and Washington State Updates to Employer-Employee Arbitration, Confidentiality, Non-Disclosure, and Non-Disparagement Agreements

Spring of 2022 has seen notable changes to both federal and Washington state laws regarding arbitration, confidentiality, non-disclosure, and non-disparagement agreements between employers and their employees.  These changes were enacted to promote public policy that gives employees more freedom to either resolve or disclose claims of illegal activities that occur (or, in some cases, are reasonably believed to have occurred) in the workplace, which may have broad implications for employers in Washington State.

Amendments to the Federal Arbitration Act

On March 3, 2022, President Biden signed into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, which amends the Federal Arbitration Act (“FAA”) to invalidate arbitration agreements that require arbitration of sexual assault or harassment claims. The alleging party may, however, choose to arbitrate after his or her claim arises.

As a result, preexisting arbitration agreements and joint/class-action waivers are invalid and unenforceable when dealing with claims of sexual assault or harassment under federal, tribal, and state law. This rule applies to any dispute or claim arising on or after March 3, 2022.

Changes to Washington State Non-Disclosure and Non-Disparagement Agreements

In Washington, state legislators passed the Silenced No More Act, which will have a significant effect on Washington employers’ current and future confidentiality, non-disclosure, and non-disparagement agreements.

The new law states that beginning on June 9, 2022, employers may not bar any current, former, or prospective employee or independent contractor from disclosing or discussing conduct (or the existence of a settlement related to conduct) that he or she reasonably believes to involve:

  • Illegal discrimination, harassment, or retaliation;
  • Wage and hour violations;
  • Sexual assault; or
  • Any other matter “recognized as against a clear mandate of public policy.”

The law applies to conduct in the workplace, at work-related events (coordinated by or through the employer), between employees, and between an employer and employees on and off work premises, and retroactively applies to pre-existing agreements should an employer attempt to enforce such provisions.

In practical terms, this new law broadly prohibits Washington employers from requesting or requiring employees to sign confidentiality agreements concerning any conduct that the employee reasonably believes to be illegal, even as part of a settlement or severance agreement.

There are three narrow carve-outs to the Silenced No More Act:

  • The law does not apply retroactively to settlement and/or severance agreements entered into before June 9, 2022;
  • Employers may still require confidentiality as to the severance or settlement amount; and
  • Employers may still require and enforce confidentiality or non-disclosure agreements related to trade secrets, proprietary information, and confidential business information.

Employers who violate this law on and after June 9, 2022 could be liable for actual or statutory damages of $10,000, plus reasonable attorneys’ fees and costs.

Gordon Thomas Honeywell’s Labor and Employment attorneys can help you navigate these new changes in the law and ensure that any arbitration, confidentiality, non-disclosure, and non-disparagement policies in use at your business comply with these new federal and state regulations. Please do not hesitate to call our office for more information.