By Melanie M. Ghaw, Esq. and Rachel H. Khedouri, Esq.
While the rest of us were shopping and baking in preparation for our holiday feasts, the New York Legislature was busy cooking up some activity of its own. As a follow-up to our Fall 2023 New York Legislative Roundup, available HERE, employers should be aware of three significant bills signed into law just before Thanksgiving.
1. New York Expands Restrictions on Non-Disclosure Provisions in Certain Agreements
Beginning in 2018, as a result of the #MeToo movement, Section 5-336 of the New York General Obligations Law has been amended on multiple occasions to prohibit employers from requiring confidentiality of the underlying facts in settlements, agreements, or other resolutions of claims involving unlawful discrimination, unless confidentiality is the alleged victim’s preference. The amendments also provided that the employer was required to give the proposed non-disclosure provision to the individual in writing, allow 21 days for the individual to consider the provision, and provide at least seven days after execution to revoke the agreement.
On November 17, 2023, Governor Hochul signed into law S4516, which further amends Section 5-336. The amendments took effect immediately upon signing and apply to agreements entered into on and after November 17, 2023. Specifically, the amended law:
- Expands the application of the restrictions, which previously applied only to claims of discrimination, to also include claims of harassment or retaliation;
- Appears to extend the application of Section 5-336 to both settlement agreements where the individual has already asserted a covered claim and separation agreements where no claim has yet been raised; and
- Renders unenforceable any release of a covered claim if the agreement includes any of the following terms:
- A requirement that the individual pay liquidated damages if they violate a nondisclosure or non-disparagement clause;
- A requirement that the individual forfeit all or part of the consideration for the agreement if they violate a nondisclosure or non-disparagement clause; or
- A requirement for an affirmative statement, assertion, or disclaimer by the individual that they were not in fact subject to unlawful discrimination, harassment, or retaliation.
The amended law also permits individuals to waive the full 21-day period to consider the terms and conditions before finalizing the agreement, provided they have been given up to 21 days. However, if the discrimination claim is filed in court, the 21-day consideration period would not be waivable under the New York Civil Practice Law & Rules.
Finally, the amendment adds independent contractors to the existing section restricting agreements with employees or potential employees that include provisions to prevent the disclosure of factual information related to future claims of discrimination. Such provisions are not valid in the absence of notification to the individual that the agreement does not act to prohibit them from speaking with law enforcement, the Equal Employment Opportunity Commission, the State Division of Human Rights, the Attorney General, a local commission on human rights, or legal counsel.
2. New York State Enacts Freelance Isn’t Free Act
On November 22, 2023, Governor Hochul signed into law S5026 – also known as New York State’s “Freelance Isn’t Free Act” — which enacts a new Section 191-d of the New York Labor Law to provide freelance workers with wage protection and recourse for violations of the law. The law defines a “freelance worker” as any natural person or organization composed of no more than one natural person who is hired or retained as an independent contractor to provide services for an amount equal to or greater than $800 (either in a single contract or when aggregated with all service contracts during the immediately preceding 120 days). The definition of “freelance worker” excludes sales representatives, practicing attorneys, licensed medical professionals, and construction contractors.
With the exception of government and municipal entities, any person who retains a freelance worker to provide services (the “hiring party”) must provide the freelance worker with a physical or electronic copy of a written agreement to include, at a minimum, the following information:
- The names and addresses of the hiring party and freelance worker;
- An itemization of services provided by the freelance worker, the value of the services, and the rate and method of compensation;
- The date by which the hiring party must pay the freelance worker or the mechanism by which the payment date will be determined; and
- The date by which the freelance worker must submit to the hiring party a list of services rendered to meet internal processing deadlines to ensure timely payment to the freelance worker.
The new law requires hiring parties to pay their freelance workers on or before the payment due date as specified in the contract; if no payment date is specified, the hiring party must pay the freelance worker no later than 30 days following the completion of services. Once performance has commenced under the contract, the law prohibits a hiring party from requiring a freelance worker to accept less compensation than agreed upon as a condition of timely payment. The hiring party must retain a copy of the written contract for at least six years.
The law prohibits retaliation by a hiring party against a freelance worker for exercising or attempting to exercise their rights under the law. Freelance workers alleging violations of the law may file a civil action in a court of competent jurisdiction, subject to a six-year statute of limitations, and/or file a complaint with the Commissioner of Labor. Damages for successful claims of non-payment may include the amount owed under the contract, double damages, injunctive relief, reasonable attorneys’ fees and costs, and other appropriate remedies. Damages for successful claims of retaliation may include statutory damages equal to the value of the underlying contract for each violation of the law’s anti-retaliatory provision. The Commissioner of Labor is authorized to investigate complaints and award civil and criminal penalties and may sue hiring parties on assigned claims from freelance workers for unpaid wages. The Commissioner is expected to issue applicable rules and make model contracts available. The law takes effect May 20, 2024, and applies only to contracts entered into on or after that date.
3. New York Extends the Statute of Limitations to File Claims of Unlawful Discrimination with the New York State Division of Human Rights to Three Years
On November 17, 2023, Governor Hochul signed into law S3255, which amends Section 297 of the Executive Law to provide an extension of time to file complaints of unlawful discriminatory practices with the New York State Division of Human Rights from one year to three years. Prior to this amendment, the three-year statute of limitations applied only to claims of sexual harassment in employment. Under the amended law, the increased statute of limitations will apply to all claims of unlawful discriminatory practices. The law will take effect on February 15, 2024, and will apply to claims that arise on or after that date.