Change to WA Law Affects Severance/Separation Agreements

August 10, 2022

It is not uncommon for employers and employers parting ways to enter into a Separation or a Severance Agreement which lays out the terms of any payment to the employee and expectations for how the parties will conduct themselves following separation. Many times such agreements include provisions prohibiting one or both parties from disparaging the other and include broad confidentiality or nondisclosure provisions. 

HB 1795 updates RCW 49.44 to restrict non-disparagement and nondisclosure language found in agreements between employers and employees. The changes to the law took effect last month and specifically prohibit employers from entering into agreements with employees “not to discuss conduct or the existence of a settlement involving conduct, that the employee reasonably believed under Washington state, federal, or common law to be illegal discrimination, illegal harassment, illegal retaliation, a wage and hour violation, or sexual assault, or that is recognized as against a clear mandate of public policy.” Such provisions in any agreement between an employer and employee are void and unenforceable. Moreover, even requesting an employee sign such an agreement violates the law and subjects the employer to civil liability, including actual damages or $10,000, plus attorney’s fees and costs. The new prohibition takes aim at “conduct that occurs at the workplace, at work-related events coordinated by or through the employer, between employees, or between an employer and an employee, whether on or off the employment premises.”

The protections of HB 1795 extend to current, former, and prospective employees and independent contracts and Washington residents.

Importantly, the law provides that employers may still enter into agreements with employees that protect trade secrets, proprietary information, and confidential information unrelated to illegal acts.

Employers contemplating nondisclosure agreements or severance/separation agreements that contain nondisclosure, confidentiality, and/or non-disparagement provisions should be on alert to review the agreements for compliance with the changes to the law. Many agreements that seek to protect certain information learned during the employment relationship broadly define confidential information to include all information learned while working for the employer that is not generally known. This type of definition could include instances of sexual harassment, allegations of wage and hour violations, and other alleged illegal conduct related to employment matters. Employers may want to consider including specific language in their agreements making clear that restrictions do not include employment matters addressed by HB 1795. 

Members with questions related to changes to the law should contact Member Care.