Emerging from the New York State legal scene is a recent ban on liquidated damages and forfeiture provisions in violation cases involving non-disclosure agreements. This amendment affects the settlement of discrimination and harassment claims. From here on out, stakeholders must be more meticulous in drafting confidentiality and non-disparagement clauses in their settlement agreements. This news is particularly significant for employers as the new law, signed by Governor Kathy Hochul on November 17, 2023, stipulates specific consequences for one-sided contracts.
The newly introduced law is set to shake things up within the realm of confidential settlement agreements. Specifically, it invalidates any release of claims embedded in a future settlement agreement, should it put forth a requirement necessitating the complainant to pay the employer in liquidated damages or to forfeit any section of the settlement fee. This forfeiture or payment is predicated on the potential violation of any confidentiality clause, such as a non-disclosure agreement, within the settlement.
The implications of this ruling could be far-reaching, potentially reshaping the ways companies within the state draft their non-disclosure agreements, especially within settlement arrangements. For large corporations and law firms, the move underscores an important shift in legal proceedings. The law puts the onus on employers to judiciously review the terms of their settlement agreements and revise them if existing provisions are deemed inappropriate under the new legislation.
In essence, this legislative change promotes a more balanced legal framework for those engaged in discrimination and harassment claims settlements. Going forward, employers, corporate counsels, and human resource professionals should acquaint themselves with these changes to ensure that any future agreements are in compliance with the new statute.