Non-disparagement clauses are enforceable in California only in narrow circumstances. State law voids any clause that would prevent an employee from discussing illegal workplace conduct, block a settling party from disclosing facts about harassment or discrimination, or punish a consumer for an honest review. Clauses that respect those boundaries — and clauses in ordinary business-to-business deals — can still hold up.
Employment and Separation Agreements
The Silenced No More Act (SB 331), codified at California Government Code section 12964.5, makes it an unlawful employment practice to require any worker to sign a non-disparagement agreement that blocks disclosure of information about illegal acts in the workplace. The rule reaches offer letters, ongoing employment contracts, and severance packages alike.1California Legislative Information. California Government Code 12964.5
For the clause to survive, it must include language substantially like this: “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.” Without that carve-out, the provision is void as contrary to public policy.1California Legislative Information. California Government Code 12964.5
“Unlawful acts in the workplace” is defined broadly. It covers harassment, discrimination, and retaliation, but also any other conduct the employee reasonably believes to be illegal. The employee doesn’t have to be proven right. A reasonable belief is enough, which knocks out the common employer argument that no violation was ever established.
A separation agreement carries an extra requirement: the employer must tell the employee they have the right to consult an attorney before signing, and must give at least five business days to do so. Skipping that step undermines enforceability before the clause is even tested.1California Legislative Information. California Government Code 12964.5
Settlement Agreements
Settlements are governed by California Code of Civil Procedure section 1001. If the underlying claim involves sexual assault, sexual harassment, workplace harassment or discrimination, retaliation for reporting any of those, or housing discrimination, a confidentiality provision that restricts disclosure of the factual information is void by statute.2California Legislative Information. California Code of Civil Procedure 1001
Two things can still be kept private. The settlement amount can remain confidential — an employer can require silence on financial terms, just not on what happened. And at the claimant’s request, the agreement can shield the claimant’s identity and any facts that would reveal it. That identity protection doesn’t apply when a government agency or public official is a party.2California Legislative Information. California Code of Civil Procedure 1001
Section 1001 targets specific claim types. A settlement resolving a commercial disagreement, a breach of contract dispute, or an intellectual property fight can still include an enforceable non-disparagement provision.
Consumer Reviews
California Civil Code section 1670.8, sometimes called the “Yelp law,” makes it illegal for a business to include a contract provision that strips a consumer’s right to make statements about the seller, its employees, or its goods and services. A business cannot penalize a customer for posting a negative review, and any clause attempting to do so is void. Threatening to enforce such a clause is itself unlawful.3California Legislative Information. California Civil Code 1670.8
Federal law reinforces this. The Consumer Review Fairness Act, 15 U.S.C. § 45b, voids any standardized contract provision that prohibits or restricts consumer reviews from the moment the contract is formed. Violations are treated the same as violating an FTC rule on unfair or deceptive practices, and the FTC and state attorneys general can bring enforcement actions.4Office of the Law Revision Counsel. 15 USC 45b Consumer Review Protection
If a business threatens to sue you over a negative review, both state and federal law defeat the contract claim before the fight ever reaches the substance of what you wrote.
Federal Overlays Worth Knowing
Two federal rules sit on top of California law and matter for many workers here.
In its 2023 McLaren Macomb decision, the National Labor Relations Board held that simply offering a severance agreement containing a broad non-disparagement clause violates the National Labor Relations Act. The reasoning: such clauses tend to discourage employees from discussing wages, working conditions, and other workplace issues protected under federal labor law. The employer doesn’t have to enforce the clause; presenting it can itself be an unfair labor practice. This applies to most private-sector employees in California.5National Labor Relations Board. Board Rules That Employers May Not Offer Severance Agreements Requiring Employees to Waive Rights
For financial-industry workers and employees of publicly traded companies, SEC Rule 21F-17(a) prohibits any action that would prevent someone from communicating with the SEC about a possible securities law violation, including enforcing or threatening to enforce a non-disparagement or confidentiality agreement against someone who reported.6eCFR. 17 CFR 240.21F-17 The SEC treats internal policies, compliance manuals, and codes of conduct the same as formal agreements.7Securities and Exchange Commission. Whistleblower Protections
When These Clauses Do Hold Up
California doesn’t strike down every restriction on negative speech. It strikes down restrictions that hide illegal conduct, suppress consumer feedback, or exploit unequal bargaining power. Several kinds of clauses still stand:
- Mutual non-disparagement clauses between two businesses with roughly equal bargaining power. The employee and consumer protections above don’t reach arm’s-length commercial deals between sophisticated parties.
- Agreements protecting genuinely confidential business information — customer lists, financial data, proprietary processes. California courts draw a clear line between protecting trade secrets and silencing someone about workplace conduct.
- Settlements resolving claims outside the categories in CCP 1001, such as breach of contract, commercial lease disputes, or intellectual property disagreements.
- Employment agreements that include the required statutory carve-out. The clause can still restrict other kinds of disparaging statements; it just can’t reach conduct the employee reasonably believes is illegal.
What Happens If You Breach a Valid Clause
If the clause is enforceable and you violate it, the consequences track ordinary contract law. The other side can sue for damages, meaning they’d need to prove actual harm — lost business or measurable reputational injury. Some agreements set a liquidated damages figure for breach, though California courts will look closely at whether that amount is a reasonable estimate of anticipated harm or an unenforceable penalty. An injunction to stop further statements is also possible, though courts approach prior restraints on speech cautiously.
Severance clawbacks are the most common pressure point. If you signed a separation agreement, received severance, and later spoke publicly, the agreement may demand repayment. Whether the clawback holds depends entirely on whether the underlying clause was valid. A clause that was void from the start — because it lacked the statutory carve-out or covered protected speech — cannot support a clawback either.
Anti-SLAPP as a Defense If You Get Sued
If an employer or business sues you for violating a non-disparagement clause, California’s anti-SLAPP statute, Code of Civil Procedure section 425.16, offers a fast exit. The law lets a defendant file a special motion to strike any cause of action arising from protected speech, including statements made in connection with judicial proceedings, government investigations, or public issues.8California Legislative Information. California Code of Civil Procedure 425.16
Once the motion is filed, the plaintiff has to show a probability of winning. If they can’t, the case is dismissed early and the defendant can recover attorney’s fees. Courts have applied this defense in non-disparagement disputes, particularly where the statements were made during internal investigations, regulatory complaints, or litigation. This is often where enforcement collapses in practice: even a technically valid clause becomes expensive and slow to litigate against a defendant who invokes anti-SLAPP.