California Code of Civil Procedure Section 1001: NDA Limits in Settlements

California Code of Civil Procedure Section 1001 voids any clause in a settlement agreement that would prevent or restrict disclosure of factual information about a claim of sexual assault, sexual harassment, workplace harassment or discrimination, retaliation, or housing discrimination. Signed as SB 820 and effective for agreements entered into on or after January 1, 2019, the statute treats such clauses as against public policy, meaning they cannot be enforced even when both sides agreed to them.¹

What the Statute Voids

The prohibition reaches any settlement provision that prevents or restricts a party from disclosing factual information about a covered claim, whether that claim was filed as a civil action or as an administrative complaint (for example, with what was then the Department of Fair Employment and Housing).¹ Mutual agreement does not save the clause. If it conflicts with the statute, it is void from the moment it is signed.

Subdivision (b) extends the same rule to the courts. A judge cannot enter an order, by stipulation or otherwise, that restricts disclosure in a way that conflicts with the statute.¹ A protective order or a sealing request cannot be used to achieve what a private NDA cannot.

Which Claims Are Covered

Section 1001 applies to four categories of claims:

Sexual assault claims not already governed by CCP Section 1002.
Sexual harassment claims under Civil Code Section 51.9, which reaches harassment in business, service, and professional relationships — physicians, attorneys, teachers, landlords, real estate agents, financial planners, elected officials, directors, producers, and others in substantially similar roles.²
Workplace harassment, discrimination, failure to prevent harassment or discrimination, and retaliation claims under the Fair Employment and Housing Act.¹
Housing discrimination, harassment, or retaliation claims against housing accommodation owners under Government Code Section 12955.³

The housing category is easy to miss. A tenant settling a harassment or discrimination claim against a landlord is covered the same way an employee settling a FEHA claim is.

What Can Still Be Kept Confidential

The statute leaves two meaningful carve-outs.

The Settlement Amount

Confidentiality provisions protecting the dollar amount of the settlement are expressly permitted. Parties can keep the financial terms private without touching the statute.¹

The Claimant’s Identity

At the claimant’s request, the agreement may include provisions shielding the claimant’s identity and any facts that could lead to identifying them, including the content of court pleadings.¹ This protection has one important limit: it does not apply when a government agency or public official is a party to the settlement. In those cases, the claimant cannot request anonymity.

How Section 1001 Fits With Section 1002

Section 1001 operates alongside CCP Section 1002, which has governed the most serious sexual offenses since January 1, 2017. Section 1002 prohibits confidentiality provisions in settlements involving felony sex offenses, childhood sexual assault, sexual exploitation of a minor, and sexual assault against elderly or dependent adults.⁴

One difference matters in practice. Section 1002 allows the State Bar of California to discipline an attorney who demands a prohibited confidentiality clause or advises a client to sign one.⁴ Section 1001 contains no equivalent. Its enforcement comes from the voidness of the clause itself, not from professional consequences for counsel. Before advising on confidentiality terms in a sexual assault settlement, counsel needs to identify which statute governs.

When the Statute Applies

Section 1001 applies to settlement agreements entered into on or after January 1, 2019. Confidentiality clauses in agreements signed before that date remain enforceable on their original terms.¹ The execution date is the first thing to check when reviewing an older agreement.

A Federal Tax Layer Worth Knowing

Internal Revenue Code Section 162(q), added by the Tax Cuts and Jobs Act in 2017, denies the payor a deduction for settlement payments and related attorney fees in sexual harassment or sexual abuse cases if the settlement is subject to a nondisclosure agreement. Because Section 1001 already voids NDAs covering the factual substance of these claims in California, the federal rule largely reinforces what state law requires: a party who tries to include an NDA in a California sexual harassment settlement risks losing the deduction on top of having an unenforceable clause. The IRS rule applies only to the party paying the settlement; recipients can still deduct their own attorney fees to the extent those fees are otherwise deductible.⁵

1
California Legislative Information. California Code CCP 1001 – Confidential Settlement Agreements
2
California Legislative Information. California Civil Code 51.9 – Sexual Harassment in Professional Relationships
3
California Legislative Information. California Government Code 12955 – Housing Discrimination
4
California Legislative Information. California Code of Civil Procedure 1002
5
Internal Revenue Service. Certain Payments Related to Sexual Harassment and Sexual Abuse