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New York Curtails NDAs and Extends the Statute of Limitations for Claims

19 Dec

Update Applicable to:  Effective date
All employers and hiring parties with a non-disclosure agreement or settlement.  November 17, 2023.

What happened?

On Nov. 17, New York Gov. Kathy Hochul signed into law Senate Bill 4516, which amends Section 5-336 of the New York General Obligations Law to restrict certain terms from being included in Non-disclosure agreements (NDA) involving claims of discrimination, harassment, or retaliation. The amendments went into effect immediately and apply to agreements entered on or after the effective date.

What are the details?

Assembly Bill 501 modifies the statute of limitations, so any complaint filed with the New York State Division of Human Rights for all forms of discrimination, will have 3 years instead of 1.Now, all types of complaints have a 3 year statute of limitation – Ogletree Deakins.

Senate Bill 4516 modifies the law in the following ways:

  • Expand the law’s nondisclosure provision requirements to settlements, agreements, or other resolutions involving claims of harassment or retaliation in violation of laws prohibiting discrimination.
  • Remove the mandatory 21-day wait period for complainants to review the nondisclosure agreement; now they can waive it or sign earlier if they choose but the 7-day revoke consent period is still a right.
  • Expand the notice requirement to independent contractors, which must now also include reference to the attorney general.
  • Makes unenforceable any agreement involving claims of unlawful discrimination, including discriminatory harassment or retaliation, from including a term or condition that requires the complaint to:
    • …pay liquidated damages for violation of a nondisclosure clause or c clause.
    • …to forfeit all or part of the consideration for the agreement, for violation of a nondisclosure clause or non-disparagement clause; or
    • it contains or requires any affirmative statement, assertion, or disclaimer by the complainant that the complainant was not in fact subject to unlawful discrimination, including discriminatory harassment, or retaliation.

Business Considerations

  • Consider updating your provisions (separation, severance, settlement, NDAs, and non-disparagement) so they do not become unenforceable by the effects of this new law. For multi-state businesses and hiring parties, consider doing the same but for New York State.
  • Consult an attorney if needed for a tailored NDA.


Source References

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