My Severance Agreement Has a Confidentiality Clause. What Does That Mean?

The confidentiality clause in your severance agreement typically does two things: it prevents you from disclosing the terms of the agreement itself, and it may extend to protect the company's confidential business information. Understanding the difference matters.

Confidentiality of the Agreement Terms

The most common confidentiality provision prevents you from telling anyone the details of your severance deal. How much you received, what you agreed to, and sometimes even the fact that a severance agreement exists at all.

This is standard. Employers don't want current employees hearing that a departing colleague negotiated a $50,000 severance. That creates expectations and precedent. The confidentiality clause protects the company from those conversations.

But think about the practical implications. If you can't discuss the terms of the agreement, you can't tell your spouse how much money is coming in. You can't explain to a financial advisor why you have a lump sum payment to plan around. You can't tell your therapist about the restrictions you agreed to. These are situations where absolute confidentiality is unreasonable, and they're worth negotiating.

Confidentiality of Business Information

Some severance agreements go beyond the deal terms and include broad confidentiality provisions covering the company's trade secrets, proprietary information, client lists, pricing data, and business strategies. This type of confidentiality obligation may survive the severance agreement and apply indefinitely.

If your role gave you access to genuinely sensitive information, some confidentiality obligation is reasonable. But the clause should be specific about what information is covered. A provision that says "all information learned during employment" is unreasonably broad because it would cover publicly available information, general industry knowledge, and your own skills and expertise.

What California Law Limits

SB 331 (Silenced No More Act). Since January 2022, California employers — including those in Los Angeles — cannot use confidentiality provisions in severance agreements to prevent employees from disclosing information about workplace harassment, discrimination, or other unlawful conduct. The agreement must include specific language stating that the confidentiality clause does not restrict your right to discuss these topics.

Discussion of wages and working conditions. Under the National Labor Relations Act and California Labor Code Section 232, you have the right to discuss your own wages and working conditions. A confidentiality clause cannot override this.

Government agency disclosures. You can always share information with government agencies investigating potential violations. The EEOC, CRD, DLSE, OSHA, and SEC are all protected.

How to Negotiate the Confidentiality Clause

Carve out your immediate circle. Ask for explicit permission to discuss the agreement with your spouse or domestic partner, your attorney, your financial advisor, and your tax preparer. This is a standard request and almost always granted.

Clarify what "confidential information" means. Push for a specific definition rather than a blanket reference to "all information." Confidential information should be limited to actual trade secrets and proprietary data, not general knowledge or your professional expertise.

Ensure SB 331 compliance. The agreement should include the required language confirming that the confidentiality clause doesn't restrict disclosures about unlawful workplace conduct. If this language is missing, the provision may not be enforceable.

Set reasonable scope and duration. For business information confidentiality, push for a defined time period rather than an indefinite obligation. Trade secret protection can last as long as the information remains a trade secret, but general business information shouldn't bind you forever.

What Happens If You Breach Confidentiality

Depending on the agreement, consequences can include being required to return the severance payment (a "clawback"), paying liquidated damages specified in the agreement, or being sued for breach of contract.

In reality, enforcement is difficult. How does the company prove you told your neighbor about the severance amount? Usually, breaches only get enforced when they're public and damaging, like posting the details on social media or sharing them with a reporter.

Still, don't test the boundaries unnecessarily. If you want to share information, make sure it falls within a negotiated carve-out or a legal protection.

Get Clear Terms Before Signing

Ambiguous confidentiality clauses create ongoing anxiety. You shouldn't spend the next five years wondering whether telling your financial planner about the severance violated the agreement. Negotiate for clarity now.

If your severance agreement includes a confidentiality clause you're unsure about, talk to our employment team. Free consultation for employees throughout Los Angeles and Southern California. We'll explain exactly what the clause covers and help you negotiate terms you can live with.