New York Expands Restrictions on Release Agreements For Claims of Discrimination, Harassment and Retaliation
On November 17, 2023, New York Governor Kathy Hochul signed into law S4516 restricting the use of confidentiality clauses in employment releases relating to claims of harassment, discrimination, and retaliation. S4516 amends New York General Obligation Law Section 5-336, one of the original #MeToo statutes, which prohibited employers from including terms or conditions that would prevent disclosure of the underlying facts and circumstances to a claim in agreements resolving sexual harassment claims unless such a provision was requested by the employee. Section 5-336 was originally passed in 2018 and was amended in 2019 expanding this prohibition to apply to all claims of discrimination. The 2023 amendment expands Section 5-336 further to cover not only claims of discrimination, but also claims involving “discriminatory harassment and retaliation.”
The recent amendments also now permit employees to waive the previously non-waivable twenty-one-day consideration period to sign certain releases with nondisclosure provisions. Notably, Section 5003-B of the New York Civil Practice Law and Rules remains unchanged, requiring that plaintiffs wait the full twenty-one day period before signing a settlement agreement.
Significantly, the amendments provide that a release of a discrimination, harassment, and retaliation claim is unenforceable if the agreement includes any of the following terms:
- A clause requiring the employee to pay liquidated damages for violating a nondisclosure or nondisparagement provision;
- A forfeiture clause requiring the employee to give up part or all of the consideration for the agreement for violating a nondisclosure or nondisparagement provision; and
- Any affirmative statement, assertion or disclaimer by the employee that the employee was not subject to unlawful discrimination, harassment or retaliation.
Prior to S4516, only agreements with employees and potential employees were covered by Section 5-366. Now agreements with independent contractors are also covered.
On November 17, 2023, Governor Hochul also signed into law A501, which extends the timeframe to file administrative complaints with the New York State Division of Human Rights to three years for all discrimination claims. In 2020, the law was changed providing a three-year statute of limitations for sexual harassment claims filed with the NYSDHR, while a one-year statute applied to all other claims. With this amendment, the three-year statute of limitations now applies to all claims of discrimination filed with the NYSDHR.
The amendments above went into effect immediately and apply to claims filed and agreements entered into on or after the effective date. These laws are the latest of a number of changes in New York to employment agreements and non-disclosure provisions. In light of the new restrictions, employers should review their settlement agreements and use of nondisclosure and nondisparagement provisions in other agreements, including separation agreements that may release claims that do not rise to the level of a formal administrative charge or lawsuit.