New York State Division of Human Rights Discontinues Private Settlements—Is This Another Hurdle to Settlement?
The New York State Division of Human Rights (NYSDHR) recently announced that for complaints filed on or after October 12, 2021, it will no longer discontinue complaints following private settlements. This announcement comes as a significant change in the division’s long-standing practice of allowing parties to privately settle complaints before case closure. Previously, the NYSDHR would typically review settlements where the complainant was assisted by a division attorney.
The NYSDHR stated in its announcement that it “has a vested interest in the ultimate resolution of all cases,” including those in which complainants are represented by private counsel. Prior to a hearing, if a complainant’s attorney seeks a discontinuance, he or she will be required to disclose in writing the reason for the requested discontinuance. If the reason is due to a private settlement, the NYSDHR has stated that it will not grant the discontinuance. Instead, the parties will be required either to (1) proceed through the NYSDHR’s public hearing process or (2) settle publicly through a NYSDHR commissioner’s order that would indicate the terms of the settlement.
New York State significantly amended its antidiscrimination laws in 2019. Importantly, as a result of those amendments, employers in New York State are essentially prohibited from requiring nondisclosure clauses in any settlement, agreement, or other resolution of any claim in which the factual foundation involves sexual harassment or any form of discrimination, including those brought under the New York State Human Rights Law, unless the condition of confidentiality is the complainant’s preference. This requirement would effectively eliminate confidentiality in agreements settled with the NYSDHR, as the terms of any such stipulation would need to be disclosed.
It is unclear whether the NYSDHR will no longer issue orders discontinuing complaints after private settlements have been reached with respect to all pre-hearing complaints, or only as to those in which it has issued “probable cause” determinations. The NYSDHR did not comment on whether it would allow complaints to be discontinued through private settlements during the investigative phase and prior to any determinations. An open question also remains as it relates to what terms the NYSDHR will require the parties to disclose, should they still choose to settle privately.
Employers may want to begin to consider the implications of entering into settlements with the NYSDHR, given that confidentiality terms may no longer be on the table and settlement amounts may be disclosed.
Employers may also want to stay tuned for additional updates as this policy change is implemented and the impact on private settlements continues to evolve.