New York Legislators Upend the Workplace Legal Landscape

New York employers should be aware of sweeping changes to the state’s employment laws impacting settlement and separation agreements, employment-related litigation, and hiring and pay practices.

State lawmakers’ 2019 changes come on the heels of landmark legislation enacted in 2018 aimed at curbing workplace sexual harassment.

[SHRM members-only HR Q&A: What are the different types of sexual harassment?]

Employers should immediately review their policies and application processes, as well as training, payroll, and compensation and benefits programs, to ensure compliance with New York’s new laws. Here are the key components employers should note.

Nondisclosure Provisions Get the Kibosh

In July 2018, New York became the first jurisdiction to curtail the use of nondisclosure provisions in sexual-harassment settlement agreements. The law prohibits employers from including nondisclosure provisions unless the employee wants to include the provisions and the employer complies with certain nuanced procedural requirements.

In 2019, lawmakers expanded this limitation to cover agreements resolving all forms of unlawful discrimination, harassment and retaliation. Going forward, provisions that appear to bar disclosure of the underlying facts of such claims may be included in a settlement, separation or similar agreement only if the employee:

• Prefers the nondisclosure or confidentiality provisions.
• Has 21 days to consider the nondisclosure or confidentiality provision—a period that cannot be shortened or waived.
• Has seven days after signing to revoke the agreement.
• Memorializes his or her preference of confidentiality in a separate written agreement.

Nondisclosure provisions also cannot restrict employees from participating in administrative agency investigations or disclosing necessary facts to receive certain public benefits, such as Medicaid or unemployment.

Beginning Jan. 1, 2020, any nondisclosure agreement that prevents employees from disclosing future discrimination claims will be void unless it includes certain notifications.

Lowering the Bar for Proving Workplace Harassment

Following California’s lead, New York’s new laws make it easier for employees to prove workplace harassment claims. Currently, under both federal and New York law, an employee alleging harassment must show that the conduct was severe or pervasive.

Under the new laws, however, harassment, at least for purposes of New York’s anti-discrimination law, will be deemed illegal “regardless of whether such harassment would be considered severe or pervasive under precedent applied to harassment claims.” 

The new laws do provide a defense if the employer can show that the harassing conduct consists of mere “petty slights or trivial inconveniences.”

However, employers will no longer be able to invoke the so-called Faragher-Ellerth defense to harassment claims. This defense allowed employers to avoid harassment-related liability by maintaining anti-harassment policies and by showing that an employee unreasonably failed to notify the employer of the alleged harassment.

These changes align New York state law with the historically more employee-friendly New York City Human Rights Law.

Expanding Equal Pay Protection to All Employees

During the 2019 legislative session, lawmakers also expanded equal pay protections to employees of all classes and characteristics covered by the state’s anti-discrimination law. 

This means that in addition to a sex-based equal-pay lawsuit, pay discrimination claims can be based on age, race, creed, color, national origin, sexual orientation, gender identity or expression, disability, and other recognized classes.

The new laws also lower the legal standard for employees to prove pay discrimination.  Previously, employers were required to ensure equal pay for equal work. Now New York employers must ensure equal pay for “substantially similar work.”

Say Goodbye to Salary-History Inquiries

Over the past few years, several New York localities enacted bans on salary history inquiries. Empire State employers outside those jurisdictions, however, have been free to ask applicants about their wage history—until now. 

In another move to broaden the state’s anti-discrimination laws, legislators passed a bill prohibiting employers from asking applicants about their salary histories. Specifically, the law will prohibit all New York employers from:

• Relying on an applicant’s salary history in determining salary or whether to offer employment.
• Requesting an applicant or employee’s salary history.
• Requesting salary information from an applicant’s or employee’s current or former employer. 

The law nevertheless provides two key exceptions to the salary inquiry ban. First, applicants may voluntarily, without prompting, disclose such information so they can negotiate their pay. Second, employers can verify salary history if, at the time compensation is offered, the applicant or employee provides prior compensation history to support a request for higher wages.

Additional Expansions to New York’s Workplace Laws

The new laws contain the following additional provisions that New York employers should note:

• All employers will now be subject to the state’s anti-discrimination law, regardless of size.
• Nonemployees, such as independent contractors, will also be entitled to anti-discrimination protections. The laws also protect domestic household workers from all forms of harassment.
• Employees who win state-law discrimination, harassment or retaliation claims will be able to recover uncapped punitive damages and will automatically be awarded their attorney fees.
• The limitations period to file sexual-harassment claims with the New York State Division of Human Rights will increase to three years from one year.
• Employers will be required to distribute additional notices and other materials to new and existing employees about sexual-harassment prevention (in English and the employee’s primary language), including a copy of any information presented at the employer’s annual sexual-harassment-prevention training sessions.

The laws also bar contractual clauses that require mandatory arbitration for harassment and discrimination claims. However, federal law will likely pre-empt this change.

Mark Goldstein and Alexandra Manfredi are attorneys with Reed Smith in New York City. Saranne Weimer is an attorney with Reed Smith in Princeton, N.J.

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