NY State Division of Human Rights: Private Settlements No Longer Permitted

Seyfarth Shaw LLP

Seyfarth Synopsis: The New York State Division of Human Rights (“the Division”) recently announced that it will no longer grant a discontinuance for reason of private settlement for complaints filed on or after October 12, 2021.

On October 1, 2021, the Division circulated a significant update regarding the role of private settlements in the claims resolution process. The Division began by acknowledging the prevalence of private settlements for charges filed with the agency, stating that approximately half of all post-probable cause settlements are undisclosed to the Division and the public. According to the Division, this figure is worrisome because such settlements are shielded from further inspection. The notice explained that the Division has a sincere interest in ensuring that the terms of each settlement comply with the purpose of the New York Human Rights Law and do not offend public policy. Therefore, the Division outlined a new procedure to effectively eliminate confidentiality from the settlement process.

Traditionally, after a private settlement was reached between the parties, the Division would issue, upon request, a Commissioner’s Order. The Commissioner’s Order would confirm that the matter was resolved, but the terms of the settlement would remain undisclosed—even to the Division. For complaints filed on or after October 12, 2021, however, the possibility of obtaining a Commissioner’s Order based upon a private settlement only is unlikely.

In accordance with the Division’s new change in policy, for any complaint filed on or after the October 12th deadline, where discontinuance is requested, the complainant’s attorney must submit a written statement explaining the request for discontinuance. The Division is clear that a discontinuance, and Commissioner’s Order, will no longer be granted for private settlements. Instead, to proceed with a settlement, the parties may either settle through a public Order after stipulation that includes the agreed upon terms or proceed through the Division’s public hearing process. Although parties before the Division are still permitted to settle, the strategic advantages associated with private settlements are effectively eliminated by the Division’s new public disclosure requirement.

Takeaways for Employers

This policy change, which has always applied when the complainant is represented by Division counsel, will now be applied universally. However, some uncertainties do remain. For instance, it is unclear from the announcement whether this policy applies only to cases in which probable cause has been found, or whether the parties may resolve a case at the preliminary, investigatory stage without these restrictions. It is also unclear what terms the Division will ask the parties to agree to in order to resolve a matter they otherwise wish mutually to resolve, how involved the agency will be in negotiating settlement terms, and whether an attorney will be assigned at an earlier stage to engage in such conciliation efforts.

Seyfarth will continue to monitor any developments with the Division’s discontinuance of private settlements and provide updates when available.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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