New York Enacts (More) New Restrictions on Settlement Agreements, Extends Statute of Limitations for Employment Claims
Thursday, December 7, 2023

In the wake of the #MeToo movement, New York, like other states, enacted legislation aimed at limiting employers’ use of non-disclosure provisions in settlement agreements to resolve claims of workplace discrimination. Recently, Governor Kathy Hochul signed legislation that amends those existing laws to further strengthen the restrictions on non-disclosure provisions in settlement agreements for discrimination, harassment, and retaliation claims. The legislation also extends the statute of limitations for filing such claims with the state enforcement agency. 

Senate Bill 4516 prohibits employers from including in any agreement to settle discrimination, harassment, or retaliation claims, “any term or condition that would prevent the disclosure of the underlying facts and circumstances to the claim or action unless the condition of confidentiality is the complainant’s preference.” The new law amends existing law by broadening the prohibition of confidentiality provisions to cover harassment and retaliation claims. Previously, the prohibition only applied to discrimination claims. The new law also allows employees to waive the 21-day consideration period for non-disclosure provisions, which was non-waivable under prior law. In addition, the new law invalidates any release of any discrimination, harassment, or retaliation claim that purports to require the employee:  (i) to pay liquidated damages or forfeit all or part of the consideration for the agreement for violating a nondisclosure or non-disparagement clause; or (ii) to make any affirmative statement, assertion, or disclaimer that he or she was not in fact subject to unlawful discrimination, harassment, or retaliation. The new law also covers independent contractors, in addition to employees and applicants. 

Separately, Assembly Bill 501 extends the statute of limitations to file a complaint with the New York State Division of Human Rights from one to three years. Previously, the law provided a three-year statute of limitations only for sexual harassment claims. Under the new amendment, employees will have three years to file any type of workplace discrimination or harassment claim.   

Governor Hochul signed both bills into law on November 17, 2023.  Senate Bill 4516 took effect immediately and Assembly Bill 501 will take effect 90 days from the Governor’s signing. New York’s restrictions on non-disclosure provisions and expansion of the statute of limitations for filing discrimination claims are just some of the latest changes in an ongoing national trend towards expanding employee protections in employment claims. Employers should be aware of these changes and understand that prior form agreements may need to be updated.

 

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