With the New Year in full swing, it is important for New York employers to be aware of recent changes to New York’s statutes relating to severance agreements.
On November 17, 2023, New York enacted S4516, which provides amendments to Section 5-336.
Before the amendment, Section 5-336 restricted certain terms from being included in release agreements involving claims of discrimination. However, S4516 expands that coverage to cover not only discrimination claims but also claims involving “discriminatory harassment and retaliation.”
S4516 also provides that “no release of any claim, the factual foundation for which involves unlawful discrimination, including discriminatory harassment or retaliation,” shall be enforceable if the agreement “resolving such claims” includes:
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Liquidated damages for the employee’s violation of a nondisclosure or non-disparagement provision;
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The employee’s forfeiture of all or part of the consideration of the agreement due to a violation of a nondisclosure or non-disparagement provision; or
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An affirmative statement, assertion, or disclaimer by the employee that the employee was not subjected to unlawful harassment, discrimination, or retaliation.
Finally, S4516 revises 5-336’s review and revocation period. As a reminder, Section 5-336 prohibits employers from requiring a nondisclosure provision in a release agreement involving claims of discrimination, unless (1) confidentiality is the employee’s preference, and (2) the employee is given 21 days to consider the agreement and 7 days to revoke. However, Section 5-336 previously required the employee to wait a full 21 days before they could sign the agreement. Now, S4516 states that a 21-day consideration period is waivable – mirroring the ADEA’s requirements. Understand, though, that this change does not affect New York City rules which retain that an employee must wait the full 21 days to sign a nondisclosure agreement after a discrimination claim has already been filed in court.
With these changes, it is important that New York employers revisit their severance agreements and settlement agreements to ensure they are in compliance with S4516.
