New Restrictions on Releases of Claims Involving Discrimination and Harassment

On November 17, 2023, New York enacted a new law (S4516) that restricts what terms can be included in nondisclosure provisions in a release of claims involving discrimination, harassment, or retaliation. The law went into effect immediately and applies to agreements entered into on or after November 17th. Employers should discuss the impact of S4516 with legal counsel but here are a few key points:

How Does Section S4516 Affect Releases?

S4516 amends Section 5-336 of the New York General Obligations Law. The law originally provided that employers could not include in any agreement resolving a claim of sexual harassment “any term or condition that would prevent the disclosure of the underlying facts and circumstances to the claim or action unless the condition of confidentiality is the complainant’s preference.” If the complainant agrees to a confidentiality provision, they must be given a copy of the proposed non-disclosure agreement and will then have twenty-one days to decide whether to agree to it and an additional seven days after signing the agreement to revoke it. 

Section 5-336 was later amended to include other forms of discrimination, not just sexual harassment. 

The new law further expands Section 5-336 to address claims involving “discriminatory harassment and retaliation.” In addition, individuals now have “up to twenty-one days” to consider a confidentiality provision where the claim being released is not in litigation, but the twenty-one day consideration is waivable. However, individuals must still wait the full twenty-one days if the claim is already in litigation because the twenty-one day period is not waivable under Section 5003-B of the New York Civil Practice Law & Rules (“CPLR”), which the new law does not amend.

S4516 also adds that a settlement agreement cannot:

1. Require a complainant to pay liquidated damages for violation of a nondisclosure clause or nondisparagement clause;
2. Require a complainant to forfeit all or part of the consideration for the agreement, for violation of a nondisclosure clause or nondisparagement clause; or
3. Contain or require any affirmative statement, assertion, or disclaimer by the complainant that the complainant was not in fact subject to unlawful discrimination, including discriminatory harassment, or retaliation.

The consequence of including any of these prohibited items is significant — the settlement agreement’s release is not enforceable. It is not clear whether these prohibitions apply only to employees who have asserted claims, or to all separation agreements, including those for employees who have not asserted a claim. Unless and until a court resolves the ambiguity, the safest practice is to remove these provisions from all separation agreements.

Finally, these provisions also now apply to independent contractors as well as employees and potential employees.

What Steps Should Employers Take?

Employers should review their standard separation, severance, and settlement agreements with their counsel to ensure they comply with the new law going forward. 

Please feel free to reach out to any of our attorneys if you have any questions or would like our assistance in complying with New York’s new law affecting releases for claims involving discrimination.

NOTICE: Material provided on this website has been prepared by Kauff McGuire & Margolis LLP solely for general informational purposes, and it is not intended to and does not constitute legal advice. Material provided on the website is not privileged and does not create an attorney-client relationship with the Firm or any of its lawyers.