USA – NEW YORK Trends and Developments Contributed by: Joshua Stanton, David Russell and Torie Feldman, Perry Law
L.2019, Chapter 160, Section 7, effective 11 October 2019). The purpose of the amendment was to “build[] off of what was done in 2018 to enact further reforms for sexual harassment” and “to abandon the protection of those who would discriminate and sexually harass in the workplace” (NY Comm Rep, 2019 AB 8421 (NS)). In line with its purpose, the 2019 amendment also added prohibitions on contracts between employers and employees (including potential employees) that prevented the disclosure of information related to “ future claim[s] of dis- crimination ” (ie, claims that may accrue post- execution) (emphasis added). The 2019 version of Section 5-336 stood until November 2023, when New York overhauled the statute to further broaden its coverage while limiting some of its restrictions. The 2023 amendment was meant to prohibit “settlements of harassment and discrimination claims from including terms or conditions requiring a plaintiff to pay liquidated damages for violating a non- disclosure agreement” (NY Sponsors Mem, 2023 SB 4516). And, according to the legisla- tive history, after the amendment “agreements may not require the complainant to forfeit part or all of the consideration for violating the non- disclosure provisions, nor may they be required to sign an affirmative statement, assertion, or disclaimer stating that they were not subject to discrimination or retaliation”. Specifically, the 2023 amendment expanded Section 5-336 in the following three ways. • It made Section 5-336’s coverage of harass- ment and retaliation claims explicit, clarify- ing that the law covers claims “involv[ing] discrimination, harassment or retaliation in violation of laws prohibiting discrimination,
including discriminatory harassment or retali- ation, including but not limited to Article 15 of the executive law”. • It made the release of such claims unenforce- able if the settlement agreement provides for liquidated damages or forfeiture of even some consideration against the complainant if they later violate the agreement’s confidentiality or non-disparagement provisions. • It made the release of such claims unenforce- able if the settlement agreement contains or requires affirmative statements by the com- plainant that there was no unlawful discrimi- nation, harassment or retaliation. The 2023 amendment also revised Section 5-336 by removing the required 21-day consideration window. As revised, complainants instead have “up to” 21 days to consider the provisions before signing a confidentiality preference agreement ‒ meaning complainants could opt to waive the waiting period entirely (see S4516, L.2023, Chapter 658, Section 1, effective 17 Nov 2023). Where do amendments to Section 5-336 leave employees? As currently constructed, Section 5-336 applies to settlement agreements in the employment context where the underlying claims concern discrimination, harassment or retaliation. Within this context, if the parties choose to settle such claims, the settlement agreement cannot require the complainant to refrain from disclosing the underlying facts and circumstances of the claims unless such a requirement is the complainant’s preference. If the complainant does prefer a confidentiality clause, that preference must be memorialised in writing in a separate confidentiality preference agreement, which the complainant must be pro- vided up to 21 days to consider. After execu-
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