ARTICLE
11 January 2024

Amendments To New York's NDA Law

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Foley & Lardner

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Foley & Lardner LLP looks beyond the law to focus on the constantly evolving demands facing our clients and their industries. With over 1,100 lawyers in 24 offices across the United States, Mexico, Europe and Asia, Foley approaches client service by first understanding our clients’ priorities, objectives and challenges. We work hard to understand our clients’ issues and forge long-term relationships with them to help achieve successful outcomes and solve their legal issues through practical business advice and cutting-edge legal insight. Our clients view us as trusted business advisors because we understand that great legal service is only valuable if it is relevant, practical and beneficial to their businesses.
New York governor Kathleen Hochul recently signed into law S4516, which amended General Obligations Law Section 5-336 ("GOL 5-336").
United States Employment and HR
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New York governor Kathleen Hochul recently signed into law S4516, which amended General Obligations Law Section 5-336 ("GOL 5-336"). The amendments expanded restrictions on the use of nondisclosure provisions ("NDAs") in certain workplace settlement agreements.

These amendments, which took effect on November 17, 2023, apply to all agreements entered into after that date.

GOL 5-336, one of the country's first #metoo statutes, originally prohibited employers from requiring confidentiality of underlying facts in sexual harassment settlement agreements unless, after a 21-day waiting period, confidentiality was the preference of the employee making the complaint. Over the years, the New York Legislature has amended the statute to expand its protections. These latest amendments include five notable changes:

  1. Whereas the previous restrictions only applied to claims of unlawful discrimination, the restrictions regarding the use of nondisclosure provisions now apply to settlements, agreements, and other resolutions involving claims of harassment or retaliation in violation of laws prohibiting discrimination.
  2. Settlements, agreements, and other resolutions involving claims of unlawful discrimination, including discriminatory harassment or retaliation, may not include provisions that require a complainant to:
    • make an affirmative statement, assertion, or disclaimer that the complainant was not subject to unlawful discrimination;
    • pay liquidated damages for violation of nondisclosure or nondisparagement clause; or
    • forfeit all or part of the consideration for the agreement for violation of a nondisclosure clause or nondisparagement clause.
  3. While complainants still have up to 21 days to consider the inclusion of a confidentiality provision in a pre-litigation settlement agreement, that consideration period is now waivable. It is important to note that Section 5003-B of the New York Civil Practice Law & Rules, which requires employees to wait the full 21 days before signing an agreement containing a nondisclosure provision, still governs settlement agreements related to discrimination claims that have been filed in court.
  4. GOL 5-336 now applies to independent contractors in addition to employees and potential employees.
  5. A settling complainant must be notified that they are not prohibited from speaking to the New York Attorney General.

Employers in New York State should review agreements entered into after November 17, 2023, to confirm the enforceability of those agreements and compliance with S4516.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
11 January 2024

Amendments To New York's NDA Law

United States Employment and HR

Contributor

Foley & Lardner LLP looks beyond the law to focus on the constantly evolving demands facing our clients and their industries. With over 1,100 lawyers in 24 offices across the United States, Mexico, Europe and Asia, Foley approaches client service by first understanding our clients’ priorities, objectives and challenges. We work hard to understand our clients’ issues and forge long-term relationships with them to help achieve successful outcomes and solve their legal issues through practical business advice and cutting-edge legal insight. Our clients view us as trusted business advisors because we understand that great legal service is only valuable if it is relevant, practical and beneficial to their businesses.
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