New York governor Kathleen Hochul recently signed into law S4516, which amended General Obligations Law Section 5-336 (“GOL 5-336”). The amendments expanded restrictions on the use of nondisclosure provisions (“NDAs”) in certain workplace settlement agreements.
These amendments, which took effect on November 17, 2023, apply to all agreements entered into after that date.
GOL 5-336, one of the country’s first #metoo statutes, originally prohibited employers from requiring confidentiality of underlying facts in sexual harassment settlement agreements unless, after a 21-day waiting period, confidentiality was the preference of the employee making the complaint. Over the years, the New York Legislature has amended the statute to expand its protections. These latest amendments include five notable changes:
- Whereas the previous restrictions only applied to claims of unlawful discrimination, the restrictions regarding the use of nondisclosure provisions now apply to settlements, agreements, and other resolutions involving claims of harassment or retaliation in violation of laws prohibiting discrimination.
- Settlements, agreements, and other resolutions involving claims of unlawful discrimination, including discriminatory harassment or retaliation, may not include provisions that require a complainant to:
- make an affirmative statement, assertion, or disclaimer that the complainant was not subject to unlawful discrimination;
- pay liquidated damages for violation of nondisclosure or nondisparagement clause; or
- forfeit all or part of the consideration for the agreement for violation of a nondisclosure clause or nondisparagement clause.
- While complainants still have up to 21 days to consider the inclusion of a confidentiality provision in a pre-litigation settlement agreement, that consideration period is now waivable. It is important to note that Section 5003-B of the New York Civil Practice Law & Rules, which requires employees to wait the full 21 days before signing an agreement containing a nondisclosure provision, still governs settlement agreements related to discrimination claims that have been filed in court.
- GOL 5-336 now applies to independent contractors in addition to employees and potential employees.
- A settling complainant must be notified that they are not prohibited from speaking to the New York Attorney General.
Employers in New York State should review agreements entered into after November 17, 2023, to confirm the enforceability of those agreements and compliance with S4516.
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