New York State Limits Remedies for Breach of Nondisclosure Provisions in Settlement Agreements

New York State has banned liquidated damages and clawback provisions designed to protect confidentiality.

New York State Limits Remedies for Breach of Nondisclosure Provisions in Settlement Agreements

On November 17, 2023, New York Governor Kathy Hochul signed a law—which is effective immediately—banning clauses in agreements settling discrimination, retaliation, or harassment claims from requiring a complainant to pay liquidated damages or forfeit consideration for breaches of non-disparagement or confidentiality. If such clauses are included, the agreement's release would be unenforceable, but the employer may still remain bound by all other provisions, including the obligation to pay any agreed-upon settlement amount.

The new law, which amends N.Y. Gen. Obligations Law § 5-336, contains a few additional provisions. First, it prohibits agreements to settle discrimination, retaliation, or harassment claims from requiring an affirmative statement by the complainant that they were "not in fact subject to unlawful discrimination." Second, it amends N.Y. Gen. Obligations Law § 5-336 to state that employees must be given up to 21 days to consider an agreement to keep the facts and circumstances underlying discrimination claims confidential, but can sign in less than 21 days if they choose. The prior version of the law required that employees take the full 21 days to consider the agreement. Finally, the new law makes clear that it applies to independent contractors as well and provides that complainants must be free to speak to the attorney general under any agreement not to disclose factual information related to future claims of discrimination.

Going forward, employers should remove the banned provisions from their settlement agreements involving claims of discrimination, retaliation, or harassment, and should consider revising any agreements in progress. The law only applies to agreements settling discrimination, harassment. or retaliation claims, so no changes need to be made to standard separation agreements. Confidentiality provisions can be difficult to enforce, and one of the main functions of liquidated damages and clawback provisions often is to deter employees from breach. Employers should seek counsel on alternatives to these types of provisions. 

 

Author: Jones Day

Source: JDSupra

Customer Stories

See how leading enterprise in-house teams have scaled smarter with Legal.io's high-caliber flex talent.

More from Legal.io


Is the Verein Structure Still Viable for Global Law Firm Mergers?

Experts are mixed on whether Big Law firms should consider combining using the vereins structure as opposed to other merger models. Some firms who have structured as a verein have succeeded in expanding globally but experts warn about the risk of producing a fragmented culture.

Dec 17, 2024
Read More
Community Spotlight: Chaia Odoms Morgan, Assistant General Counsel Labor & Employment at Peraton
Community Spotlight: Chaia Odoms Morgan, Assistant General Counsel Labor & Employment at Peraton

Join our host and CEO, Pieter Gunst, as he explores the career journey of Chaia Odoms Morgan, Assistant General Counsel Labor & Employment at Peraton

Mar 16, 2023
Read More
3 Tips for Dealing with a Coworkers’ Stress
3 Tips for Dealing with a Coworkers’ Stress

When working with people everyday, forming a bond is natural. In this article we’ll address how best to approach a coworkers’ stress.

Nov 13, 2018
Read More
The Sound of Risk: Mapping Keystrokes with Deep Learning and Its Implications for Law Firms
The Sound of Risk: Mapping Keystrokes with Deep Learning and Its Implications for Law Firms

Explore the recent research on deep learning and keystroke mapping, achieving 95% accuracy in translating sounds to letters. This article highlights how this technology unveils new security concerns, focusing on law firms' unique vulnerabilities, including data breaches and cyberattacks on valuable client information.

Aug 10, 2023
Read More
H-1B Visa Extensions
H-1B Visa Extensions

While the H-1B quota for the fiscal year 2014 is over, it is significant to note that those foreign nationals already in the US on H-1B visas are exempt from the annual quota.

Aug 19, 2015
Read More
Ready to hire?

Schedule a free consultation to discuss your hiring needs.

Free 15-min consultation
Legal.io Platform
5 star reviews
Hiring made smarter

Easy-to-use platform for hiring legal talent, managing spend, and optimizing your panel — plus an average savings of 50%.

Need Immediate Help?

Submit a hiring request and let our experts handle the entire process for you.