New Law Changes Rules on Separation Agreements in New York

New York lawmakers have passed an amendment to the General Obligations Law and Governor Kathy Hochul inked the legislation, which went into effect on November 17, 2023. The amendment addresses the issue of confidentiality in settlements or separation agreements involving allegations of discrimination, harassment or wrongful retaliation in the workplace.

The Changes Imposed by the Amendment to the General Obligations Act

Under the law as it previously existed, a person who sought to maintain confidentiality in the settlement of a workplace discrimination, harassment or retaliation claim had to meet three specific criteria:

• They must have attested that they preferred the terms of the agreement to remain confidential
• The terms of the confidentiality agreement must be in a totally separate document from the settlement agreement
• There was a 21-day-waiting period before the confidentiality agreement could be signed, and the signature could be withdrawn or rescinded within 7 days

The amendment makes a number of significant changes:

• The 21-day waiting period may be waived (though there’s still a 7-day revocation period)
• The law has been expanded to include independent contractors who were subject to discrimination, harassment or retaliation at work
• The provisions of the confidentiality agreement will not prohibit the injured party from disclosing information to the New York Attorney General
• Any release of claims will be void if:
  • The release contains any language stating that there was no discrimination, harassment or retaliation
  • The agreement mandates payment of a specific amount of damages for breach of the nondisclosure agreement
  • The agreement calls for the forfeiture of all or any portion of the settlement amount received of violation of the nondisclosure agreement

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