New York Enacts Law Prohibiting Liquidated Damages for Violation of Non-Disclosure Agreements in Settlements of Discrimination and Harassment Claims
On November 17, 2023, New York Governor Kathy Hochul signed legislation that affects settlement agreements between employers and employees that resolve claims of discrimination, harassment and retaliation. The law invalidates a release of claims in any future settlement agreement that contains a condition requiring the complainant to pay the employer liquidated damages or to forfeit any portion of the settlement payment if the complainant violates a nondisclosure or nondisparagement provision in such settlement agreement.
Specifically, the new law states: “Notwithstanding any other law to the contrary, no release of any claim, the factual foundation for which involves unlawful discrimination, including discriminatory harassment, or retaliation, shall be enforceable, if as part of the agreement resolving such claim:
- The complainant is required to pay liquidated damages for violation of a nondisclosure clause or nondisparagement clause;
- The complainant is required to forfeit all or part of the consideration for the agreement, for violation of a nondisclosure clause or nondisparagement 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.”
The law took effect immediately upon signing and applies to all settlement agreements entered into on or after November 17, 2023.
Employers should be careful to ensure that their settlement agreements do not contain provisions providing for liquidated damages for a violation of a nondisclosure agreement; or any affirmative statement that the individual was not subject to unlawful discrimination, including discriminatory harassment or retaliation. We will continue to monitor any further guidance released from New York State regarding this new law and will keep you apprised of same. Should you have any questions, please contact Ali Law Group.
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