For example, New York passed the nation`s first national law on the subject, which “for any claim or remedy . . . the de facto basis for which sexual harassment is. . . . No employer…. have the power to include or approve in [a settlement agreement] any provision or condition that would prevent disclosure of the facts and circumstances underlying the claim or remedy, unless the condition of confidentiality is the applicant`s preference. N.Y. Gen. Obligations Law 5-336 (highlighted only here).
Earlier this month, New York passed additional laws that extended this provision to all rights to “discrimination, not just sexual harassment.” 2019 NY S.B 6577 / 2019 NY A.B. 8421. In addition, the law does not explicitly limit the ability of parties to require that the amount of the transaction remain private. Given the ambiguity about the application of section 162(q) of the Cuts and Jobs Act 2017, employers should consider adding language to their settlement agreements to address whether any portion of the consideration paid in a transaction constitutes “an agreement or payment related to sexual harassment or sexual abuse.” If a worker has never asserted such a right, employers may consider adding confirmation that only a small part of a payment to the worker is envisaged for the release of rights to sexual touching or sexual abuse. To the extent that a transaction involves the release of rights to sexual touching or sexual abuse, the employer may attempt to separate the consideration paid to the worker for the settlement of rights for sexual harassment or sexual abuse. Such an agreement allows the employer to require the employee to have a duty of confidentiality, but also allows the employer to continue to deduct from its federal taxes at least part of the transaction costs. In the meantime, a change in federal tax law, 26 U.S.C§ 162(q), affects payments made or made after December 22, 2017 with respect to sexual harassment comparisons. This federal evolution goes beyond the scope of this article, but we mention it as a “heads up” element and refer to our previous blog post here. Section 1670.11 of the Civil Code renders invalid and unenforceable any provision of a contract or settlement agreement entered into on or after January 1, 2019, if it waives a party`s right to testify in an administrative, legislative or judicial proceeding on allegations of criminal conduct or alleged sexual harassment. To satisfy the “applicant`s preference” exception, an employee has “twenty-one days to review an agreement” containing a confidentiality provision and even if the employee executes the agreement because such a provision “is the applicant`s preference”, the employee may “revoke” the agreement for a period of seven days after the employee`s performance. .