USA: New requirements for non-disclosure and non-disparagement provisions in New York

On 17 November 2023, the New York Governor signed Bill S4516 into law.
It amends Section 5-336 of the New York General Obligations Law with immediate effect and further restricts the use of nondisclosure agreements concerning the resolution of employment discrimination, harassment, and retaliation claims.
It applies to all agreements signed or entered into after 17 November 2023.

The law aims to protect employees claiming discrimination and harassment.

Previously, New York law prohibited employers from including clauses prohibiting disclosing the facts and circumstances underlying the claims in settlement agreements resolving discrimination claims.

Where the employee preferred confidentiality, the parties had to separately agree to this provision a full 21 days before signing the settlement agreement. This period is now waivable in a pre-litigation phase, but not if the discrimination claim is filed in court.

The new law covers not only claims involving discrimination but also claims involving "discriminatory harassment and retaliation" and any claims made by independent contractors.

It also invalidates releases that require employees to pay liquidated damages for violating nondisclosure or nondisparagement clauses and prohibits employers from requiring employees to affirm that they were not subjected to any alleged discrimination or retaliation.

Therefore, employers must immediately review agreements from 17 November to ensure compliance with the new amendments to Section 5-336.