Employment · Severance
The Confidentiality Clause in Your Severance Agreement May Not Mean What It Says
New York limits what an employer can ask you to keep quiet about, and a few common lines can void the whole release. Here is what to look for before you sign.
Almost every severance agreement I see has a confidentiality clause, and most have a non-disparagement clause too. People tend to read them as fixed terms: the price of the money. In New York, when the situation behind the agreement involves discrimination, harassment or retaliation, they are nothing of the kind. The law limits what the employer may ask for, and some of the most common language does not just fail on its own. It takes the release down with it.
When New York’s rules apply
General Obligations Law § 5-336 applies where the factual foundation of the claim involves discrimination, harassment or retaliation. In that situation, a confidentiality term is permitted only if:
- keeping the facts confidential is your preference, not the employer’s;
- that preference is put in a signed agreement;
- the term is written in plain English;
- you get up to 21 days to consider it; and
- you have at least 7 days after signing to revoke.
In practice, that makes confidentiality something you agree to give, not something the employer can simply impose. See confidentiality clauses.
Three lines that void the release
Subdivision 3 of the statute goes further. No release is enforceable if the agreement resolving the claim:
- makes you pay liquidated damages if you breach a confidentiality or non-disparagement clause;
- makes you forfeit the severance if you breach one; or
- contains “any affirmative statement, assertion, or disclaimer by the complainant that the complainant was not in fact subject to unlawful discrimination.”
The third one is the line many agreements carry as boilerplate: you acknowledge that you were never discriminated against, harassed or retaliated against. Where the statute applies, that sentence does not protect the employer. It voids the release.
What you can always say
No agreement can stop you from filing a charge with the EEOC or a state or local agency, or from taking part in an agency investigation. New York adds the right to speak with law enforcement, the Attorney General and your own lawyer. You can give up the right to recover money in those proceedings; you cannot give up the right to take part in them. See what claims you can’t give up.
Two federal rules that reach further
Sexual harassment and assault. A nondisclosure or non-disparagement clause agreed to before a sexual assault or sexual harassment dispute arose is not judicially enforceable. That matters most for the clauses buried in offer letters and handbooks you signed years ago.
Workers who are not supervisors. The National Labor Relations Board has held that a severance agreement whose confidentiality and non-disparagement terms would tend to restrain employees’ rights under Section 7 of the National Labor Relations Act is unlawful, and that merely offering it violates the Act (McLaren Macomb). Section 7 protects “employees,” so supervisors and managers are outside it. The decision is good law today, but the Board now has a majority that could overrule it, and its General Counsel has asked it to. See the open questions.
The open question: does any of this apply before a claim is filed?
This is where the law is genuinely unsettled. Section 5-336 is usually treated as a settlement statute. But its text reaches “any settlement, agreement or other resolution of any claim,” and it says nothing about the claim being filed, asserted or pending. The one federal decision on what triggers the statute holds that the trigger is the confidentiality term, not the settlement. No New York appellate court has decided the question.
My view: if the statute is triggered by a confidentiality term in an agreement resolving a discrimination, harassment or retaliation claim, nothing turns on whether a complaint has been filed. A severance agreement offered to someone who has complained internally about harassment, with an NDA and a general release, falls within the words the Legislature used. I would not call that settled. But an employer relying on the narrower reading is relying on an inference against the text. See the open questions.
Before you sign
- Look for a liquidated-damages clause, a forfeiture clause, and any sentence in which you disclaim having been discriminated against. If the situation involves discrimination, harassment or retaliation, ask for all three to come out.
- Ask for carve-outs: agencies, subpoenas, discussing your pay with coworkers, and enforcing the agreement itself.
- If the employer wants non-disparagement from you, ask for it from them, and ask who at the company it binds.
- Remember that confidentiality has value to the employer. If you are willing to give it, that is something to trade. See can I negotiate?
This article is general information about New York and federal law, not legal advice, and it does not create an attorney-client relationship. Attorney Advertising. Prior results do not guarantee a similar outcome.