Since October 1, 2020, Oregon employers have operated under the Workplace Fairness Act (“OWFA”), which restricts employers from including confidentiality, non-disparagement, and no-rehire provisions in settlement agreements and separation agreements unless the employee specifically requests them. In March 2022, Governor Kate Brown signed Senate Bill 1586 into law, which amends the OWFA effective January 1, 2023, and clarifies many of the provisions of the original OWFA.

Changes and Clarifications to OWFA

The OWFA amendments clarify that:

• An employer that enters into a separation or severance agreement with an employee who has not alleged a claim of discrimination under ORS 659A.030, ORS 659A.082, or 659A.112 is not restricted from including confidentiality, non-disparagement, and no-rehire provisions. For example, employers and employees resolving a wage claim, but not alleged discriminatory conduct, may include such provisions if desired.
   
• The restrictions prohibiting confidentiality, non-disparagement, and no rehire provisions apply to agreements with former employees (as well as agreements with current and prospective employees).
   
• The restrictions are now expanded to include confidentiality about the amount of or fact of any settlement, unless the employee requests such confidentiality. Prior to the amendment, the OWFA provided that a confidentiality provision “that prevents the disclosure of factual information relating to a claim of discrimination or conduct that constitutes sexual assault” could be included if the employee requested it. The amended version no longer contains this language.
   
• The amended OWFA makes it unlawful for an employer to make an offer of settlement or separation conditional upon a request by the employee to include any of these restricted terms.
   
• Employers must also provide employees a copy of the employer’s anti-discrimination policy, the requirements of which are described in ORS 659A.375, when entering into a settlement or separation agreement with an employee who has alleged a claim of discrimination under ORS 659A.030, ORS 659A.082, or 659A.112.
   
• The amended OWFA further provides that when an employer mediates claims or allegations covered by the OWFA with an employee who is not represented by an attorney, the mediator must provide the unrepresented employee with a copy of the model procedures and policies made available by BOLI under ORS 659A.375.
   
• Finally, the amendment specifies that an employee can recover a civil penalty of up to $5,000 in a private action claiming a violation of the OWFA, as well as other relief, including lost wages and emotional distress damages.

National Trends

The OWFA and the restrictions it imposes on the use of confidentiality provisions are consistent with a recent national trend. On December 7, 2022, President Biden signed the Speak Out Act, which renders unenforceable non-disclosure and non-disparagement clauses related to allegations of sexual assault and/or sexual harassment and that are entered into “before the dispute arises.” The Speak Out Act’s applicability to these provisions is different from the OWFA because it is limited to claims of sexual misconduct in the workplace, not other types of discrimination, such as race, age, national origin, and disability.

In addition, employers will likely recall that in 2018, the Tax Cuts and Jobs Act prohibited tax deductions for any settlement or payment related to sexual harassment or sexual abuse if the settlement or payment is subject to a non-disclosure agreement. The law also prohibited tax deductions for attorneys’ fees related to confidential sexual harassment settlements or payments.

Several other states have enacted similar legislation curbing the use of non-disclosure and non-disparagement provisions. In particular, Washington’s Silenced No More Act, which went into effect on June 9, 2022, is one of the most restrictive laws in the country. It voids all non-disclosure and non-disparagement provisions entered into between employers and employees, regardless of whether they were signed retroactively or prospectively, and applies to illegal acts of discrimination, harassment, retaliation, wage and hour violations, and sexual assault in employment agreements (unlike the OWFA and the Speak Out Act). Employers that attempt to enforce illegal non-disclosure agreements may face up to $10,000 or actual damages, whichever is greater, in addition to paying employees’ attorney fees.

California, Hawaii, Illinois, Maine, Nevada, New Jersey, New York, Tennessee, and Vermont have similar restrictions on non-disclosure provisions between employers and employees. Accordingly, because of the variation in state laws regarding such provisions, employers should seek to ensure that form or template agreements satisfy the requirements of the relevant jurisdictions.