SB 355 — AN ACT CONCERNING LIMITATIONS ON THE USE OF NONDISCLOSURE AGREEMENTS.

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224355 11claim, sSB355or Fileany No.other form of agreement between the employer and an employee or a volunteer.

224 and nondisparagement provisions include those contained in employment agreements, independent contractor agreements, agreements to pay compensation in exchange for the release of a legal claim, or any other form of agreement between the employer and an employee or a volunteer.

(e) Any employer who, on or after October 1, 2026, violates the provisions of this section shall be liable in a civil cause of action for sSB355actual /damages Fileor No.statutory damages of ten thousand dollars, whichever is more, as well as reasonable attorneys' fees and costs.

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(f) A prohibited nondisclosure or nondisparagement provision included in any contract or agreement entered into prior to October 1, 2026, shall be void and unenforceable only where such provision was entered into at the outset of employment or during the course of employment.

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224 13 sSB355 File No.

224 The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

In general, fiscal impacts are based upon a variety of informational sources, including the analyst’s professional knowledge.

Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note State Impact:

Agency Affected Fund-Effect FY 27 $ FY 28 $ Various State Agencies App Fund - See Below See Below Potential Cost Note:

App Fund=All Appropriated Funds Municipal Impact:

Municipalities Effect FY 27 $ FY 28 $ All Municipalities Potential See Below See Below Cost Explanation The bill creates a specific state civil cause of action for violations of the bill’s provisions.

This could potentially result in a cost to the state and municipalities in their capacity as employers beginning in FY 27 to the extent they violate the provisions of the bill.

Each violation may result in a cost of $10,000 for actual or statutory damages.

The court system disposes of over 250,000 cases annually and the number of cases is not anticipated to be great enough to need additional resources.

The Out Years The annualized ongoing fiscal impact identified above would continue into the future subject to the number of violations of the provisions of the bill.

sSB355 / File No.

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224 OLR Bill Analysis sSB 355 AN ACT CONCERNING LIMITATIONS ON THE USE OF NONDISCLOSURE AGREEMENTS.

SUMMARY This bill generally prohibits the use of non-disclosure and non- disparagement agreements in employment.

It makes it a discriminatory practice, under the laws administered by the Commission on Human Rights and Opportunities (CHRO), for an employer to take certain actions, such as (1) terminating employees for disclosing conduct they reasonably believed to be a discriminatory employment practice or (2) requiring employees to enter an agreement that prohibits them from disclosing this conduct.

It also voids any provision in an agreement between an employer and employee or independent contractor that prohibits the employee or contractor from disparaging or disclosing employer conduct that they reasonably believe to be a discriminatory employment practice.

Outside of the CHRO laws, the bill also makes void and unenforceable any provision in an employment contract that requires an employee not to disclose or discuss conduct that heor she reasonably believes to be illegal discrimination, harassment, or retaliation;

a wage and hour violation;

or a sexual assault, or that is recognized as against a clear mandate of public policy.

It prohibits employers from (1) discharging or retaliating against an employee for disclosing this type of conduct that occurred in the workplace or at work-related events, (2) asking or requiring an employee to enter into a prohibited non- disclosure agreement, or (3) enforcing one.

Under thebill,employerswho violate these prohibitionsare liable for actual damages or statutory damages of at least $10,000.

For agreements sSB355 / File No.

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224 entered into before October 1, 2026, however, the prohibited provisions are only void and unenforceable if they were entered into at the outset or during the course of employment, and employees can only recover damages related to preventing their enforcement.

EFFECTIVE DATE:

October 1, 2026 DISCRIMINATORY EMPLOYMENT PRACTICES The bill makes it a discriminatory practice for an employer, or the employer’s agent, to:

1.

refuse to hire or employ;

discriminate in compensation or in terms, conditions, or privileges of employment;

or bar or discharge from employment an employee or independent contractor because they (a) disclosed conduct that they reasonably believe to be a discriminatory employment practice or (b) disparaged the employer for engaging in conduct they reasonably believe to be such a practice;

or 2.

require or request a prospective, current, or former employee or independent contractor to enter into an agreement containing a provision that is void under the bill (see directly below), or for an employer to attempt to enforce the provision.

Existing law gives someone adversely affected by a discriminatory practice, or CHRO itself, the right to file a complaint with CHRO.

Void Provision The bill voids as against public policy any provision in an agreement between an employer and a prospective, current, or former employee or independent contractor that prohibits disparagement or disclosure of conduct by the employer that the employee or contractor reasonably believes to be a discriminatory employment practice.

Damages Under the bill, and regardless of the law that specifies how CHRO must determine damages, an employer who violates this provision is sSB355 / File No.

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224 liable to an employee or independent contractor for actual damages or statutory damages of $10,000, whichever is more, as well as other remedies provided under law, including those described below.

Legal Interpretation The bill specifies that the provisions described above must (1) be liberally construed to carry out their remedial purpose and (2) extend to paid or unpaid interns and any volunteer engaged in service to an employer in this state in the employer’s business.

NON-DISCLOSURE AND NON-DISPARAGEMENT AGREEMENTS Separate from the CHRO discrimination laws, the bill also generally prohibits an employer from including non-disclosure or non- disparagement clauses in employment contracts.

Under these provisions of the bill, an “employee” includes (1) a current, former, or prospective employee,or anindependent contractor,and(2)any elected or appointed official of a municipality, board, commission, counsel, or other governmental body.

It does not include someone employed by their parents, spouse, or child.

An “employer” includes the state and its political subdivisions;

anyone who acts, directly or indirectly, in the employer’s interest to any of its employees;

and any of the employer’s successors in interest.

A “volunteer” is someone who provides services to an employer without compensation, including interns.

Void and Unenforceable Provisions The bill makes any provision in an employment contract between an employer and an employee or volunteer void and unenforceable if it requires the employee or volunteer not to disclose or discuss conduct, or a settlement involving conduct, that he or she reasonably believes is illegal (under state, federal, or common law) discrimination, harassment, or retaliation directed at an employee or volunteer;

a wage and hour violation;

or a sexual assault, or that is recognized as against a clear mandate of public policy.

Prohibited Provisions Under the bill, prohibited non-disclosure or non-disparagement sSB355 / File No.

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224 provisions:

1.

concern illegal conduct at the workplace, at work-related events coordinated by or through the employer, between employees or volunteers, or between an employer and an employee or volunteer, whether on or off the employment premises, and 2.

include those in employment agreements, independent contractor agreements, agreements to pay compensation for the release of a legal claim, or any other form of agreement between the employer and an employee or a volunteer.

Violations The bill makes it a violation for an employer to:

1.

discharge or otherwise discriminate or retaliate against an employee or volunteer for disclosing or discussing conduct occurring in the workplace, at work-related events coordinated by or through the employer, between employees or volunteers, or between the employer and an employee or volunteer, whether on or off the employment premises, that the employee or volunteer reasonably believes to be (a) illegal discrimination, harassment, or retaliation directed at an employee or volunteer or (b) a wage and hour violation or a sexual assault, or that is recognized as against a clear mandate of public policy;

2.

request or require that an employee or volunteer enter into an agreementwithprohibitednon-disclosureornon-disparagement provisions;

or 3.

enforce a prohibited non-disclosure or non-disparagement provision, whether through a lawsuit, a threat to enforce, or any other attempt to influence a party to comply with a prohibited provision.

Actions Not Prohibited The bill specifies that it does not prohibit:

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224 1.

an employer and an employee or volunteer from protecting trade secrets or proprietary or confidential information that does not involve illegal acts;

2.

an employee or volunteer from requesting a binding written agreement with the employer, which may include terms and conditions that preclude the employer from disclosing certain confidential information about an employee or a volunteer that does not involve illegal acts;

or 3.

enforcing a provision in any agreement that prohibits disclosing the amount of a claim settlement.

Civil Cause of Action and Damages The bill creates a civil cause of action by making any employer who violates these provisions on or after October 1, 2026, liable for actual damages or statutory damages of $10,000, whichever is more, as well as attorney’s fees and costs.

Limits for Agreements Entered Before October 1, 2026 Under the bill, a prohibited non-disclosure or non-disparagement provisionenteredbeforeOctober1,2026,isvoidandunenforceableonly if it was entered into at the outset of employment or during employment.

And in these cases, an employee may recover only damages relating to preventing the provision’s enforcement.

These limits do not apply to a non-disclosure or non-disparagement provision in an agreement to settle a legal claim.

Legal Interpretation The bill specifies that its (1) provisions must be liberally construed to effectuate its remedial purpose and (2) remedies are cumulative and must not be construed as restricting any other remedy available under law.

Governing Law Under the bill, a non-disclosure or non-disparagement provision in any agreement signed by an employee or volunteer who is a sSB355 / File No.

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224 Connecticut resident is governed by Connecticut laws.

COMMITTEE ACTION Labor and Public Employees Committee Joint Favorable Yea 9 Nay 4 (03/12/2026) sSB355 / File No.

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