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Release Agreement for Harassment Claims? Not so fast New York Employers…

Attention New York employers: On November 17, 2023, Governor Hochul signed S4516 into law, amending Section 5-336 of the General Obligations Law (“GOL”), commonly known as New York’s #MeToo statute. The amendment significantly changes the terms permissible in settlement agreements for claims relating to discrimination, harassment, or retaliation.

As of the effective date, November 17, any settlement agreements involving claims of discrimination, harassment or retaliation, cannot:

  1. Compel the complainant to forfeit consideration if they breach nondisclosure or nondisparagement clauses;
  2. Mandate the complainant to pay liquidated damages for violating nondisclosure or nondisparagement clauses; or
  • Include or require an affirmative statement, assertion, or disclaimer stating the complainant was not subject to unlawful discrimination, including discriminatory harassment or retaliation.

If these provisions are present in settlement agreements, the entire release becomes unenforceable. In other words, the employee can still sue you even after fully executing a release agreement (and receiving the money that typically follows)!

Additional changes the amendment made include:

  1. Waiver of the 21-day consideration period: Previously, complainants had to wait 21 days before entering into a confidentiality agreement. Now, complainants can waive this consideration period, although the separate confidentiality preference agreement and 7-day revocation period still apply.
  2. Extension of protections to independent contractors: The recent amendment expands the #MeToo statute to cover independent contractors. Previously, the law only applied to agreements between employers and employees.

In light of these changes, employers should ensure their settlement agreements for claims of harassment, discrimination, or retaliation do not include clauses related to liquidated damages, clawback provisions in case of a breach, or statements denying unlawful discrimination. Inclusion of such clauses will render the release of claims unenforceable, but the obligation to pay the settlement amount may persist. If you are executing a release and you are not sure if the underlying claims involve harassment, discrimination, or retaliation, seek skilled counsel for advice.

Brody and Associates regularly defends employment litigation cases for management and advises management on complying with the latest local, state and federal employment laws.  If we can be of assistance in these areas, please contact us at info@brodyandassociates.com or 203.454.0560