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Gag Clauses No Longer Allowed in Settlements With State Licensees

Businesses licensed by the State of California will still be able to settle lawsuits against them, but they won’t be able to hide the reasons for the suits.

Beginning January 1st, the 250 types of businesses licensed by the State of California will still be able to settle lawsuits, but they won't be able to prevent the person who files a suit from also going to the state to complain.

State Democratic Senator Jerry Hill authored the law that eliminates what are called "gag clauses" in legal settlements for all businesses licensed by the Department of Consumer Affairs.

"There already were limitations because they found certainly that if a physician or a surgeon did something wrong, it's in the public's interest to know what that was," explained Hill.

Most of the businesses are medical in nature. But barbers, auto mechanics and guide-dogs-for-the-blind instructors are also affected. Similar bills had passed the legislature in previous years, but most were vetoed.

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