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How common is mutual confidentiality in severance & separation agreement California

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  • How common is mutual confidentiality in severance & separation agreement California

    I am expected to sign a confidentiality and non-disparagement clauses protecting my employer in exchange for a substantial payment. I'd like to include in the separation agreement a statement of a mutual confidentiality and non-disparagement. How common are such mutual confidentiality agreements and how likely is my employer to agree? I believe in case I don't sign my employer is exposed to a substantial risk of investigation by the Department of Fair Employment and Housing.

  • #2
    Your post sounds suspiciously as if you are saying that if the employer fails to agree to your "request" that you will be making a report of illegal activities - a report that you will fail to make if you get what you are looking for. I hope I am misunderstanding you - if I am not, I suggest that you go to the dictionary and look up the word, "extortion".
    The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.


    • #3
      I believe my case is similar to the age discrimination complaint and litigation Google has been dealing with in the last couple of years. Instead of spending 10 years litigating it's better to settle, IMO.
      My employer offered to settle and I'm fine with that if the non-disparagement clause is mutual.


      • #4
        Wait, the company violated the law, and "offered to settle." To whom did they make this offer, to you, or to the authority that enforces the law? You said first that they were only "at risk of an investigation" so does that mean they are going to self-report?

        Otherwise, it sounds like you are saying "I have knowledge that the employer broke the law, but if they sign something I want them to sign, then I'll keep it quiet."

        So you get what you want, they stay out of trouble, and the people harmed by their breaking the law get what?

        I would also question the legality of signing a "confidentiality and non-disparagement agreement" that agrees to cover up illegal activity in return for money.


        • #5
          I'm not in your state, and this is from a NJ law firm:

          First, yes, it does appear that requesting mutual non-disparagement agreement is common and advisable. You might request that the company only disclose xyz for reference checks.

          But second (and more importantly I think), you cannot agree to not report something required by law to be reported. Also you should not agree to not report future things discovered after you sign this document.

          So for example, if my company had a severance agreement with someone, we would make it very clear that they are agreeing not to make claims against the company related to the individual employee (like they aren't going to turn around and claim they were discriminated against). But if that employee has knowledge of potential Medicare fraud at the company for example, it would be improper for the company to require that that issue be covered in this agreement, since there is a legal requirement to report potential fraud. Likewise, if the employee signed the agreement, and after they left, learned from a former co-worker, or from looking over paperwork they were allowed to take with them that the company committed Medicare fraud, then they absolutely can and should report that illegal activity, even if they signed something saying they would not "disparage" the company.

          So if you have knowledge that this company illegally discriminated against prospective tenants seeking housing, for example, then a severance agreement saying you won't report this illegal activity would likely be illegal. I don't know about California (but I can guess) but here, it's illegal to discriminate against people because of protected characteristics in approving them for housing.


          • #6
            Agreed with the above. Past that, an "agreement" between you and the employer to hide an illegal action can be considered an illegal conspiracy. Your signing the document can be considered proof that engaged in the conspiracy. Especially if the employer can document your actions, such as offer-counter-offer, in the conspiracy. Plus your part of the agreement could make you a party to any civil actions.

            Maybe this is just me, but if this ends up in court, I would want to claim that I was just a "good German" (following orders given to me by my evil employer but took no actions of my own without orders). Your trying to pull together a formal conspiracy document supported a bribe (a.k.a. severance) pretty much trashes any and all possible defenses you have if/when this go south.

            Maybe you should talk to an attorney before digging this hole any deeper.
            "Reality is that which, when you stop believing in it, doesn't go away".
            Philip K. **** (1928-1982)


            • #7
              The way you wrote your post, I am assuming you have not seen your severance agreement yet.

              There is a clause in my company's standard severance agreement that states the ee warrants that he has no knowledge of the Company's violation of any law. There is nothing that says the ee will not report a violation of the law, just that he has no knowledge of law-breaking.

              I'd read whatever they give you very carefully. You do not want to sign that if you have knowledge, proof, etc. and actually plan to report them.

              The section that discusses the concept of "mutual confidentiality" in our company's agreements typically applies to the contents of the severance agreement. Amounts paid & for how long, details of the separation, etc. You agree not to tell the world how much they paid you to leave, and they agree not to tell the world that you were pushed out the door. You both agree not to talk badly about each other, and in our clause that is referring to potential employment references or media requests. That kind of thing. They reference both the employer and the employee. If whatever they give you doesn't have that kind of treatment, I'd be surprised, but just add in the pertinent words. If it says "Employee agrees not to disparage the company" - you can suggest they edit it to read "Both parties agree not to disparage each other."


              • #8
                Thank you all for taking your time to comment about my issue, with my very special thanks going to J.J. Brown for an answer I vote the most helpful. It was interesting for me to hear, that your company J.J. Brown typically does incorporate the concept of "mutual confidentiality" in its severance agreements. It is also interesting to know that you'd be surprised if my employer wouldn't include that kind of treatment - as I was surprised myself. It is understandable to me, that in a first draft of a severance agreement my employer would present a confidentiality clause most advantageous for him. Following your suggestion I'm asking my employer to make the confidentiality clause mutual.

                J.J. Brown, do you think that a typical separation agreement does include statements about information provided to EDD (unemployment benefits) and future employers asking for references? My separation agreement in its current version ignores such issues.

                I'm looking for a severance agreement fair for both sides and within common business practice - which I'm not familiar with being in such a situation the very first time.


                • #9
                  The standard agreement that our company uses says that in response to inquiries from prospective employers, the company will provide name rank & serial number. That's it.

                  The agreement also states that the ee resigned (and that way they can say to the world and prospective employers that they resigned and weren't fired), but we verbally tell them in the termination meeting that we won't fight unemployment claims. There is nothing in the agreement about this distinction, and we do not require a written resignation letter that can later be used against them (which I've seen mentioned in plenty of horror stories on this board).

                  If you think you need the ability to file unemployment commemorated in your severance agreement because otherwise they'll fight it, you should ask for it to be included.


                  • #10
                    JJ Brown is correct. Except, any clause in a severance agreement that prohibited the individual from filing for unemployment would be unenforceable.
                    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


                    • #11
                      Agree, they can't make an employee waive their right to filing for UI.
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