Workplace Nondisclosure Agreement Ban Fails

A controversial bill banning nondisclosure agreement clauses in employment contracts, severance agreements, and legal settlements failed to receive a vote in either chamber in the 2024 session.

SB 4, sponsored by Sen. Mae Flexer (D-Willimantic) and Rep. Matt Blumenthal (D-Stamford), was approved by the Judiciary Committee on a 24-11 vote in March.

It received public critique from lawmakers in both parties and died on the Senate calendar when the General Assembly adjourned May 8.

The bill made it a discriminatory practice for an employer to take retaliatory action against an employee for disclosing a discriminatory employment practice or disparaging the employer for engaging in one if that employee had a “reasonable belief” that illegal discrimination occurred. 

Under current law, Section 46a-60(4) already makes it a discriminatory practice for “any person, employer, labor organization or employment agency to discharge, expel or otherwise discriminate against any person because such person has opposed any discriminatory employment practice or because such person has filed a complaint or testified or assisted in any proceeding under section 46a-82, 46a-83 or 46a-84.”

New Cause of Action

This new cause of action under the bill was predicated on the subjective belief of the employee as to whether discrimination occurred and whether they were punished for “disclosure” which was left undefined. 

This was problematic because it would have opened the door for disputes based on perceptions rather than concrete evidence.

No matter how unfounded, outrageous or incredible a claim of discrimination is, the employer would be prevented from taking any kind of adverse action against an employee for making a claim so long as that employee subjectively believed the claims are true and without any notice to the employer that discrimination occurred.

The bill also established a new cause of action that generally prohibited nondisclosure and nondisparagement clauses in employment contracts, severance agreements, and legal settlements. Under the bill, these provisions would be void and unenforceable.

Violation of both new causes of actions would open an employer up to minimum statutory damages of $10,000, attorneys’ fees, and costs.

For workplace discrimination claims today, Connecticut law sets the ceiling for damages at $10,000 per violation.

Privacy Protections

CBIA told lawmakers at the bill’s public hearing in March that Section 3 of SB 4 “creat[es] new causes of actions with overly broad definitions and severe financial penalties. Both bills also ban the use of NDAs in employment agreements and settlements, which could inadvertently discourage settlements and hinder privacy protections for both employers and employees”

The Connecticut Hospital Association echoed CBIA’s concerns, noting “These bills do not protect employees from illegal activities by employers. Instead, these bills create unachievable and unwise protection for employees who disparage and defame their employer when the employer has done nothing wrong—let alone something illegal—simply because an employee holds a strong belief that an activity was illegal or against public policy. The bill does not focus on the actual conduct of the employer but on the perception of the employee, which elevates legal behavior into illegal behavior based on perception, including misperceptions.”

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For more information, contact CBIA’s Wyatt Bosworth (860.244.1155) | @WyattBosworthCT.