California Confidential Settlement Agreement

While this decision clarifies whether counsel “intends to be bound to a confidentiality provision in a settlement agreement,” it is a fact, not a form, but the Supreme Court did not impose what would be necessary to show it. The Court noted, however, that the reference “to both the parties and their legal advisors” in a given confidentiality provision may suffice. After reviewing the confidentiality provisions of the case before it, the Tribunal announced that provisions stipulating that “the applicants and their counsel agree that they will remain fully confidential all the terms and contents of the settlement agreement” could be considered sufficient for a factual “to reasonably conclude” that a lawyer is bound by the confidentiality provision. In light of the above, parties who wish to bask in the confidentiality of both the parties to the trial and their lawyers must endeavour to express this intention in their confidentiality rules. If the parties clarify this intention, then, according to the California Supreme Court, lawyers should not sign as “parties to the agreement” because their signature, which approved the agreement in terms of form and content, would bind them. SB 1300 added Section 12964.5 of the Government Code, which makes an employer an illegal employment practice of signing an employer with the release of a right or right under the Fair Employment and Housing Act (FEHA). In addition, the law prohibits an employer from requiring a worker to sign a non-disappearance agreement or any other document that denies the worker the right to disclose information about illegal acts in the workplace, including, but not only, sexual harassment. The new law came into force on January 1, 2019. This law applies to agreements reached on January 1, 2019 or after those that have lodged appeals in the courts or in an administrative appeal.

The law allows the applicant to request a clause in the transaction to keep his identity confidential, including all the facts that could lead to the discovery of his identity, including briefs filed in court. Meanwhile, an amendment to the Federal Tax Code, 26 United States.C 162 (q), affects payments made or made after December 22, 2017 in relation to sexual harassment. This federal evolution is outside the scope of this contribution, but we mention it as a “heads up” article and refer to our previous blog post here. The Tax Cuts and Jobs Act, passed on December 22, 2017, amended the Internal Revenue Code to prohibit tax deductions as regular and necessary business expenses for settlement or payment costs “related to sexual harassment or abuse when such a tally or payment is subject to a confidentiality agreement.” The law also prohibits any deduction for legal fees related to billing or confidential payment.