Legislative lowdown: New York further limits NDAs to resolve discrimination claims

It’s getting harder for New York bosses to hide behind NDAs. On Nov. 17, New York Governor Kathy Hochul signed a bill into law that will further limit employers’ use of non-disclosure agreements (NDA) to resolve discrimination claims brought by employees.

The law amends Section 5-336, a #MeToo-era statute that prohibits employers from including provisions preventing “the disclosure of the underlying facts and circumstances to the claim or action” in agreements resolving discrimination claims, unless the person who filed the complaint wants it to remain confidential.

The amended law, known as Senate Bill 4516, expands the types of agreements the statute applies to: not only those pertaining to discrimination, but also “discriminatory harassment or retaliation,” according to the text.

Additionally, employers are now forbidden from entering into agreements that require the party who filed the complaint to:

• Pay liquidated damages, or “forfeit all or part for the ‘consideration’ for the agreement,” for violating a non-disparagement or non-disclosure clause
• Make “any affirmative statement, assertion, or disclaimer” suggesting that the complainant was not, in fact, subject to discrimination or retaliation

The law now also applies to independent contractors, not just to agreements between employers and employees. It nixes a mandatory 21-day waiting period, allowing complainants to sign an agreement with their employer earlier if they choose.

Separately, Gov. Hochul signed a bill into law that extends the time period during which people can report unlawful discrimination to the state’s Division of Human Rights, from one year to three years.

In light of the changes to New York’s NDA law, employers should review “standard nondisclosure provisions and agreements for New York and remove any offending language,” attorneys with law firm Fisher Phillips wrote in a blog post. “You should also work with your employment attorney to ensure that future resolutions remain in compliance with this new law.”