NYEmployers Face Complementary Federal/State Restrictions on Confidentiality & Non-Disparagement Clauses
Employers in New York who include confidentiality or non-disparagement clauses in any agreement they enter into with an employee, such as offer letters, employment agreements, restrictive covenant/non-compete agreements, severance agreements, or settlement agreements, must ensure that those clauses comply with both the new federal “Speak Out Act” and existing New York State law.
Limitations on Clauses Prior to Any Employment Dispute: The "Speak Out Act," which took effect on December 7, 2022, renders any confidentiality or nondisclosure clause, or any non-disparagement clause, in a contract or agreement with an employee unenforceable if...
it is entered into before a dispute has arisen; and…
it limits employees from disclosure or comment on a sexual assault or sexual harassment complaint;
Employers who draft pre-dispute employment agreements with confidentiality provisions must also ensure that they comply with New York State law. Any agreement between an employer and an employee that prevents the disclosure of factual information related to any future claim of discrimination is unenforceable under New York law, unless the agreement notifies the employee that it does not prohibit the employee from speaking with law enforcement, the Equal Employment Opportunity Commission, state and local human rights commissions, or an attorney.
Limitations on Clauses Once a Dispute Arises: Employers in New York State are prohibited from entering into any agreement to resolve a discrimination claim that would prevent the complainant from disclosing the underlying facts and circumstances of the harassment. The law in New York is broader than the "Speak Out Act" in that it applies to all complaints of discrimination and harassment, not just sexual harassment. However, it is more limited in the following ways...
It only applies to the facts and circumstances underlying the harassment complaint;
It is limited to agreements that are resolving a discrimination claim; and…
It does not place any additional limitations on non-disparagement clauses;
Where that Leaves Employers: Federal and New York law collectively still permit employers to impose confidentiality and non-disparagement restrictions on employees. Employers must, however, draft those clauses in the pre-dispute context to permit the disclosure of information protected by the “Speak Out Act” and to include the clarifying notification where required under New York State law.
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