Fourth, this new law only covers cases in which « sexual harassment » has been claimed. As a result, confidentiality agreements may continue to be legally part of a transaction agreement in which the worker has not claimed « sexual harassment. » On the face of it, the law prohibits the use of confidentiality agreements. However, the new law provides an exception that makes the new rule virtually meaningless. In particular, the law does not prohibit the confidentiality of the amount of the transaction or the NDA itself. In most cases where there are potential leaks, New York courts refuse to impose the silence of a hurtful party unless the employer can prove that a company`s business secrets are in danger. In addition, New York courts often find that trade secrets are no longer protected when the confidentiality period expires. In many cases, the employee could only hope to recover money damages. For several reasons, this exception for the « complainant`s » preference is likely to swallow the rule, leading to the use of confidentiality clauses in virtually all transaction agreements between companies and their employees. There are strong political considerations that favour the implementation of transaction agreements. See, Hallock v. State of New York, 64 N.Y.2d 224 (N.Y.
1984). A negotiated compromise avoids potentially costly and tedious litigation and preserves limited judicial resources. The courts would not be able to function if each dispute is transferred to legal action. Denburg v. Parker Chapin Flattau – Klimpl, 82 N.Y.2d 375 (N.Y. 1993). For example, to justify sufficient consideration, a party only has to have good faith in the merits of its position. The question arises as to whether, in the case of a civil action, the complainant could later invoke a successful breach action against the complainant for breach of the confidentiality agreement. If so, how much was the defendant recovered as a result of the applicant`s breach of confidentiality agreement? The updated FAQs remind employers of this recent change in the law that invalidates such an agreement « to the extent that it prohibits or otherwise prohibits or otherwise prohibits a complainant from presiding, testifying, attending, responding to a subpoena or participating in some way in an investigation by the relevant local, governmental or federal authority; or (ii) the presentation or disclosure of facts necessary to obtain unemployment insurance, Medicaid or other public benefits to which the complainant is entitled. » These clarifications should therefore be included in the confidentiality clauses.
The restrictions on confidentiality agreements, which now deal with claims of non-discrimination and retaliation (not just sexual harassment claims), came into effect on October 11, 2019. As noted above, the law prohibits, unless the applicant has the preference to include, the terms of confidentiality and confidentiality in agreements to resolve claims of discrimination, harassment and retaliation, to the extent that they prevent the applicant from disclosing the facts and circumstances of the underlying claims.