New York State recently enacted additional restrictions on confidentiality/nondisclosure language that can be contained in employment-related release agreements (including severance, separation, and settlement agreements). Employers that have pending employment claims which they are settling, or employers who use template separation and release agreements, should review this article in detail.
Effective November 17, 2023, employers cannot include confidentiality and nondisclosure language within settlement agreements where, “the factual foundation…involves discrimination, harassment or retaliation, in violation of laws prohibiting discrimination, including discriminatory harassment or retaliation…unless the condition of confidentiality is the [individual’s] preference.” This “preference” must be in writing.
These amendments also give individuals “up to twenty-one (21) days to consider” inclusion of the confidentiality provision. This amendment effectively makes the previously non-waivable Consideration Period waivable; individuals are now able to sign off on confidentiality language immediately upon being presented with the release, rather than waiting three weeks.
Significantly, this law does not amend Section 5003-B of the New York Civil Practice Laws & Rules (CPLR) which requires plaintiffs to wait the full 21 days before signing an agreement containing a nondisclosure provision that would prevent the underlying facts and circumstances of any discrimination claim. This CPLR provision applies only to pending litigations and filed administrative charges, not pre-litigation disputes (including release of claims through a separation/severance agreement).
In addition, a release of claims in an employment agreement, separation agreement, release agreement, or similar agreement is unenforceable if it requires the individual who has breached a confidentiality provision of such agreement to pay liquidated damages or to forfeit the agreement’s consideration (i.e., money paid by the employer or former employer per the terms of the agreement). Furthermore, such agreements cannot contain language where an individual states that the individual “was not in fact subject to unlawful discrimination, including discriminatory harassment, or retaliation[.]” Should the agreement contain such language the release of claims in the agreement would be void.
Employers should review – and modify where necessary – their separation, severance and settlement agreements that include release of New York-based claims to ensure compliance with these amendments to New York law. Employers should also review agreements that are currently being considered or have been entered into from November 17 to present to ensure compliance and to determine whether modification (retraction, amendment, or supplementation) is necessary.