It is not uncommon for a legal claim to be resolved by settlement. In such cases, the settlement will in all likelihood be memorialized in a settlement agreement which – in addition to setting out the basics of the agreement (i.e., a release of claims in exchange for monetary compensation) – will include additional provisions.
Typically, those include a confidentiality, or nondisclosure, clause.
However, a relatively recent New York law limits the use of such provisions in agreements memorializing a release of a sexual harassment claim.
New York General Obligations Law § 5-336, effective July 11, 2018, provides:
Notwithstanding any other law to the contrary, no employer, its officers or employees shall have the authority to include or agree to include in any settlement, agreement or other resolution of any claim, the factual foundation for which involves sexual harassment, any term or condition that would prevent the disclosure of the underlying facts and circumstances to the claim or action unless the condition of confidentiality is the complainant’s preference. Any such term or condition must be provided to all parties, and the complainant shall have twenty-one days to consider such term or condition. If after twenty-one days such term or condition is the complainant’s preference, such preference shall be memorialized in an agreement signed by all parties. For a period of at least seven days following the execution of such agreement, the complainant may revoke the agreement, and the agreement shall not become effective or be enforceable until such revocation period has expired.
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