New York Revises Law on Non-Disclosure Provisions in Settlements of Harassment, Discrimination and/or Retaliation Allegations: What New York Employers Should Know

New York has amended its law on non-disclosure provisions in settlement agreements when those provisions seek to keep confidential the factual foundation of alleged sexual harassment, discrimination and retaliation. 

New York initially adopted this law in response to the #MeToo movement. The law as originally enacted allowed employers to use provisions to prevent disclosure of alleged misconduct details only if the complaining party agreed that such provision was their preference and had 21 days to consider the non-disclosure provisions, as well as seven days after signing to revoke it.

The state has amended the law in several ways that affect parties resolving allegations of discrimination, harassment or retaliation. Effective November 17, 2023, the amendments:

• Prohibit a liquidated damages clause for violating a nondisclosure or non-disparagement clause.
• Bar the forfeiture of all or part of the consideration for violating a nondisclosure or non-disparagement clause.
• Forbid an affirmative statement, assertion or disclaimer that the complainant was not subject to unlawful discrimination, harassment or retaliation.

Importantly, the law says “no release of any claim . . . shall be enforceable” if it has these newly prohibited terms.  In other words, the whole release – and not only the offending provisions – could be invalidated. 

The law also modifies the consideration period to give the complaining party “up to 21 days” to sign the non-disclosure provisions in an agreement, meaning that the non-disclosure provisions may be signed before expiration of the 21-day period.

Also noteworthy: The amendment does not cover the related provision of Section 5003-B of the New York Civil Practice Law and Rules (CPLR), which has the same confidentiality requirements with respect to facts and circumstances underlying allegations of harassment, discrimination or retaliation when resolving a “claim or cause of action.”  Therefore, the mandatory 21-day waiting period continues to apply and cannot be waived when resolving a claim that has been filed in New York state court. 

With these amendments, the restrictions on using non-disclosure provisions in settlement agreements also now explicitly apply to agreements with independent contractors.  Additionally, in the required carve outs that permit disclosure of otherwise confidential information, the New York Attorney General is now specifically identified as a permitted recipient of such information. 

Despite the breadth of these amendments, the new restrictions appear to apply only when an employer seeks to include confidentiality restrictions involving allegations of discrimination, harassment, or retaliation but not in a standard separation agreement that includes a release of all claims or settlements of other types of threatened claims, such as claims for breach of contract. 

Finally, the law appears to apply only when the breach of a nondisclosure or non-disparagement clause triggers a liquidated damages or forfeiture provision, and not if triggered by other breach circumstances.   

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We will continue to monitor further guidance and developments on this new law.  In the meantime, New York employers should be mindful of these new provisions as they enter agreements that look to resolve claims of discrimination, harassment or retaliation in New York.