[ad_1]

On November 17, 2023, New York Governor Kathy Hochul signed a brand new regulation that additional limits the phrases employers might embody in launch agreements referring to claims of harassment, discrimination, and retaliation. The regulation took impact instantly and additional broadens the restrictions on launch agreements already contained in New York Normal Obligations Legislation Part 5-336 (“Part 5-336”).

Historical past

Enacted as part of New York’s 2018-2019 funds invoice, Part 5-336 was one of many first state legal guidelines focusing on confidentiality provisions contained in launch agreements handed within the wake of the #MeToo motion.[1] As we mentioned at the moment, Part 5-336 prohibits employers from together with in any settlement that resolves a sexual harassment declare, “a time period or situation that will forestall the disclosure of the underlying information and circumstances to the declare or motion”—in different phrases, a confidentiality provision—until the inclusion of such a clause is the worker’s selection. 

Consequently, any launch settlement containing a confidentiality provision that covers sexual harassment claims or their underlying information have to be executed in two elements. As defined in a FAQ by the New York State Division of Human Rights, the primary half should state that it’s the worker’s choice to enter such an settlement and that the worker has been given 21 days to contemplate the settlement and seven days to revoke consent after the 21-day interval has expired. The second half consists of “no matter paperwork incorporate” the popular phrases or situations “as half of a bigger general decision between the events.” Below the unique model of Part 5-336, the worker couldn’t execute the second half till after the 21-day interval expired. 

Part 5-336 was subsequently amended in 2019 to increase its restrictions to greater than sexual harassment claims. As we beforehand coated, this modification considerably expanded the sorts of launch agreements coated by Part 5-336 by making use of these necessities to all claims of “discrimination, in violation of legal guidelines prohibiting discrimination, together with, however not restricted to, [the NYSHRL].” This remained the state of the regulation till November 2023.

2023 Modification

On November 13, 2023, New York State Senate Invoice S4516 was delivered to Governor Kathy Hochul, and it was signed into regulation 4 days later. This invoice amended Part 5-336 and created additional restrictions on confidentiality agreements associated to harassment, discrimination, and retaliation. This modification made a number of notable additions and modifications to Part 5-336. 

First, and most important, the modification provides a brand new subsection (3) which renders some agreements unenforceable as a matter of regulation. That subsection states that “no launch of any declare, the factual basis for which entails illegal discrimination, together with discriminatory harassment, or retaliation . . . shall be enforceable, if as a part of the settlement resolving such declare: (a) the complainant is required to pay liquidated damages for violation of a nondisclosure clause or nondisparagement clause; (b) the complainant is required to forfeit all or a part of the consideration for the settlement, for violation of a nondisclosure clause or nondisparagement clause; or (c) it accommodates or requires any affirmative assertion, assertion, or disclaimer by the complainant that the complainant was not actually topic to illegal discrimination, together with discriminatory harassment, or retaliation.”

Second, the modification additionally widened the protection of Part 5-336 by including extra lessons of people coated by the regulation. Beforehand, solely workers and potential workers have been coated by the regulation. However with the passage of S4516, the identical restrictions now apply to confidentiality provisions associated to harassment, discrimination, and retaliation towards impartial contractors.

Lastly, this modification revised Part 5-336 to permit workers to just accept the phrases of a launch settlement containing a confidentiality provision previous to the expiration of the 21-day interval. Beforehand, the statute required the 21 days to go earlier than the worker might signal any such settlement. 

Key Takeaways

Whereas it’s but to be seen how courts will interpret and implement the brand new provisions of Part 5-336, employers ought to evaluation any agreements that embody confidentiality provisions and seek the advice of counsel to make sure compliance with Part 5-336. As this regulation continues to evolve, we are going to proceed monitoring developments, and supply updates as new info turns into accessible.

*Wolfram Ott is a regulation clerk within the Agency’s New York workplace. 

FOOTNOTES

[1] This funds invoice additionally created § 5003-b of the New York Civil Apply Legislation & Guidelines. S4515 doesn’t tackle the provisions of § 5003-b.

[ad_2]