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The Employer Handbook Blog
Here’s another reason to have a lawyer review your company’s separation and settlement agreements
Federal laws, such as Title VII of the Civil Rights Act of 1964, apply to most U.S. businesses across the country to make it unlawful to discriminate and retaliate against employees. But when resolving claims of discrimination and retaliation, state laws generally come into play.
And not all state laws are alike.
Plus, they may change occasionally.
For example, did you know that earlier in November, New York prohibited liquidated damages provisions in confidential settlements of harassment and discrimination claims?
On November 17, 2023, Governor Hochul signed S4516, which created more guardrails about what companies may include in agreements to resolve unlawful discrimination, harassment, or retaliation claims. On that date, New York forbade companies from including any of the following provisions in any agreement resolving such claims:
- a liquidated damages provision for violating a nondisclosure or nondisparagement clause;
- a forfeiture clause requiring a complainant to return all or part of the consideration for the agreement if they violate a nondisclosure or nondisparagement clause; or
- any affirmative statement, assertion, or disclaimer by the complainant that they were not subject to unlawful discrimination, including discriminatory harassment or retaliation.
Businesses may have nondisclosure provisions in these agreements but must afford individuals with up to 21 days to consider them. (Previously, the full 21 days was mandatory.) But, as this article notes, “the 21-day consideration period for nondisclosure provisions is waivable pre-litigation but is not waivable if the discrimination claim is filed in court, where the [New York Civil Practice Law & Rules (CPLR)] applies.”
New York also expanded its existing restrictions on contractual provisions that limit the disclosure of factual information related to any future claim of discrimination to include independent contractors.
Many companies do not embrace the idea of paying higher lawyer bills. However, it’s important to have an attorney prepare, review, or bless agreements that resolve employment-related claims. Otherwise, the company may have a nonbinding agreement that’s not worth the paper on which it is printed and end up defending a much more expensive lawsuit later.