In a recent development, New York State has enacted further restrictions on the language that can be included in specific employment-related release agreements. These agreements, which include severance, separation, and settlement arrangements, have come under increased scrutiny given the nature of the obligations they enforce on employees.
Emanated on November 17, 2023, the changes amend General Obligations Law Section 5-336 (GOL 5-336) and effectively restrict employers from including non-disclosure provisions within release agreements linked to claims associated with “discrimination, harassment, or retaliation.” These protections are rendered with the exception when “the condition of confidentiality is requested by the complainant.” The explicit demand for confidentiality by the complainant seems to be the only case under which non-disclosure provisions may still be legally included.
This amendment represents an augmentation in the state laws shielding employees and further limits the utilization of non-disclosure agreements by employers in the settlement of discrimination or harassment disputes. The potential implications for businesses and legal professionals are evident. This regulatory development could impact how future conflicts of this kind are addressed, how settlement negotiations are navigated, and potentially how corporate policies and employee contracts are drafted.
It would be prudent for employers, HR professionals, and legal teams to familiarize themselves with these changes and assess their potential repercussions for their businesses and legal practices. For more detailed information, be sure to review the critical insights of Fox Rothschild LLP on this matter here.