In an effort to further restrict the use of confidentiality clauses when resolving employment discrimination, harassment, and retaliation claims, New York recently passed S4516, which amends Section 5-336 of the New York General Obligations Law. One of the original #MeToo statutes, the previous iteration of Section 5-336 required the employer and employee to execute a separate confidentiality agreement, recognizing the employee's preference for confidentiality, where the employee: (i) was executing a release seeking to resolve a claim, the factual foundation for which involves discrimination; and (ii) would be prohibited from disclosing the underlying facts and circumstances of the discrimination claim. For the confidentiality agreement to be effective, the employee would need to wait a full 21 days after being presented with the confidentiality requirement term to execute the confidentiality agreement and then would have 7 days to revoke it.
Effective immediately upon its signing (November 17, 2023), employees are no longer required to wait the full 21 days before they can sign the separate confidentiality agreement; rather, employees can take up to 21 days to sign, but they can also sign earlier if they so choose, while still maintaining the right to revoke their signature within seven days of signing. The amendments also further expand Section 5-336's reach by requiring the use of the separate confidentiality concept not just for claims related to discrimination, but also for claims of harassment (including discriminatory harassment) and/or retaliation.
Importantly, the amendments expand other aspects of Section 5-336, going beyond confidentiality provisions in settlement agreements. Now, to ensure enforceability of the release itself, when resolving a claim, the factual foundation for which involves discrimination, harassment or retaliation, employers cannot require employees to (i) pay liquidated damages or forfeit some or all of the settlement/separation consideration for violating a non-disclosure or non-disparagement clause; or (ii) complete an affirmative disclaimer that they were not subject to discriminatory, harassing or retaliatory conduct.
Lastly, the amendments expand §5-336's requirements that employers inform employees of certain of their rights. Before the amendments, employers entering into agreements with employees or potential employees that prevented the disclosure of factual information related to any future claim of discrimination were required to inform them that they could still speak with law enforcement, the EEOC, the state division of human rights, a local commission on human rights, or an attorney retained by the employee or potential employee. The amendments now update the law to require employers to also inform independent contractors of their rights, and to add the New York State Attorney General to the list of governmental bodies to which an individual may speak notwithstanding these restrictions.
Notwithstanding the above, a close reading of these amendments indicates that a "standard" separation agreement may continue to fall outside of Section 5-336's scope, and further, the amendments did not impact Section 5-336's sister provision – New York's CPLR Section 5003-b, which mostly mirrored the confidentiality requirements when settling discrimination-based claims in a legal proceeding.
Employers should account for these amendments, which went into effect immediately, and ensure separation/settlement agreements are compliant when resolving discrimination, harassment and retaliation claims.
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