Late last week, New York legislators passed a series of sweeping changes to the state’s employment laws. These drastic changes come on the heels of landmark legislation enacted just last year – in April 2018 – aimed at curbing workplace sexual harassment. This year’s laws, which are in part a further response to the #MeToo movement, will impact settlement and separation agreements, litigation of harassment and discrimination claims, hiring practices, and pay policies for employers operating everywhere from Montauk to Buffalo. We will address the myriad of new laws – and how they will affect your business – in this five-part series.

To start, much of the discussion surrounding the new laws has focused – and understandably so – on the lowered legal standard for proving workplace harassment claims. While we will cover this topic in tomorrow’s post, there is another new change that will likely have a greater impact for Empire State businesses on a day-to-day basis: namely, the severe curtailment on the use of nondisclosure provisions in agreements resolving claims of unlawful discrimination, harassment, and retaliation.

By way of background, last year New York adopted a watershed law limiting the use of nondisclosure provisions in agreements resolving claims of sexual harassment. More particularly, the 2018 law prohibits employers from including a nondisclosure provision in agreements resolving claims of sexual harassment, unless (i) the employee-complainant prefers the inclusion of such provision and (ii) the employer complies with certain nuanced procedural requirements pertaining to the agreement at issue (for example, required consideration and revocation periods). Practically speaking, this law changed the way that New York employers approach separation and settlement agreements with employees who lodged allegations of sexual harassment.

This year’s Bill expands last year’s sexual harassment protections to encompass all forms of unlawful discrimination, harassment, and retaliation. This means that, if an employer is resolving a claim with an employee who has made a complaint of discrimination, harassment, or retaliation, the employer will be limited in its ability to keep certain information confidential. To that end, a provision barring the disclosure of the underlying facts and circumstances of a discrimination, harassment, or retaliation claim may be included in a settlement or separation agreement only if:

  • Inclusion of the provision is the employee-complainant’s preference.
  • They receive 21 days to consider the non-disclosure or confidentiality provision – a period that cannot be shortened or waived even with the complainant’s consent.
  • They have 7 days to revoke the agreement containing the nondisclosure or confidentiality provision after signing.
  • Their preference of confidentiality is memorialized in a separate written agreement.

State regulators previously published Frequently Asked Questions regarding nondisclosure agreements in the sexual harassment context. These same guidelines are expected to apply to the 2019 law as well.

Beyond just the expansion of last year’s Bill, this year’s measure also nullifies any nondisclosure provision to the extent it either (i) restricts the complainant from participating in an investigation (with local, state, or federal agencies) or (ii) prohibits a complainant from disclosing facts necessary to receive unemployment, Medicaid, or other public benefits. Lastly, beginning January 1, 2020, any nondisclosure agreement that prevents disclosure of future claims of discrimination – for example, in an agreement at the start of employment – is void unless it includes certain notifications, including that the agreement does not prohibit the employee from speaking with law enforcement, the Equal Employment Opportunity Commission, the New York State Division of Human Rights, a local commission on human rights, or an attorney retained by the employee or applicant.

This change in the law has the potential to impact many, if not most, separation and settlement agreements entered into between an employee and their employer. Any standard or template documents containing a nondisclosure or confidentiality provision should therefore be reviewed to ensure that they comply with the law’s requirements (which take effect 60 days after they are signed into law by Governor Andrew Cuomo). If you have any questions about the implications of this Bill or if you would like assistance drafting or reviewing your agreements, Reed Smith’s experienced employment attorneys are available to help.