What You Need to Know About the Changes to New York’s Non-disclosure Agreement Law

Employers’ use of a non-disclosure agreement (NDA) to resolve discrimination claims have been limited, following New York Governor Kathy Hochul’s recent signing of a new law. The law took effect on November 17 and applies to all agreements entered on or after that date.

Changes to the NDA Law

According to Fisher Phillips, here are the four key changes to New York’s NDA law:

• Expansion of the law’s nondisclosure provision requirements to settlements, agreements, or other resolutions involving claims of harassment or retaliation in violation of laws prohibiting discrimination.
• Prohibition of settlement agreements involving claims of unlawful discrimination, including discriminatory harassment or retaliation, from including a term or condition that requires a complainant to:
  • Pay liquidated damages or forfeit all or part of the consideration for the agreement if they violate a nondisclosure or non-disparagement clause; or
  • Make an affirmative statement, assertion, or disclaimer that they were not subject to unlawful discrimination.
• Expansion of a notice requirement to independent contractors, which must now also include reference to the attorney general.
• Removal of the mandatory 21-day wait period for complainants to review the nondisclosure agreement. The change now allows complainants to sign the agreement earlier if they choose. Complainants will still have seven days to revoke their consent to the agreement.

Employer and Employee Action Items

Employers in New York should review their NDA agreements to ensure they are compliant with the new requirements. According to Katz Banks Kumin, New York employers are still able to pursue claims for breach of nondisclosure clauses, but they are no longer able to set an agreed-upon liquidated damages amount or recover the consideration provided, which places more power in the hands of employees. They recommend that employees should carefully review their New York separation, severance, and settlement agreements to ensure compliance with the amended law.

Compliance Assistance with New York Laws

With new laws being enacted and many current laws being amended, it can be a challenge to ensure your business remains compliant. If you don’t have the HR staff to stay on top of it, GTM’s HR consultants are here to help. Whether you need a full-time HR team member or just occasional support, our consulting service may be the right solution. Fill out the brief form below to learn more.