Understanding New York Workplace NDAs
Learn how New York law limits workplace nondisclosure agreements in discrimination, harassment, and retaliation cases.
Nondisclosure agreements (NDAs) are common in workplace settlements and severance packages, especially when an employee has raised concerns about discrimination, harassment, or retaliation. In New York, however, state law significantly limits how far employers can go in demanding silence as a condition of resolving these claims. New amendments that took effect in late 2023 expanded these protections for workers and independent contractors.
This article explains, in plain language, how NDAs work in the employment context, what New York law allows and prohibits, and what employees should consider before signing any confidentiality clause related to workplace misconduct.
1. What Is a Workplace NDA and Why Is It Used?
A nondisclosure agreement is a contract that restricts one or more parties from revealing certain information. In the employment context, NDAs typically show up in three main situations:
- Hiring and onboarding – to protect trade secrets, client lists, proprietary technology, and other confidential business information.
- Ongoing employment – embedded in employment contracts or policies addressing confidentiality and data security.
- Severance or settlement agreements – to keep the terms of a dispute resolution or the underlying allegations from being publicly disclosed.
New York law generally allows NDAs that protect legitimate business interests, such as trade secrets or proprietary information, so long as they are reasonably drafted. The stricter rules discussed in this article apply specifically when an NDA is part of an agreement resolving claims of unlawful discrimination, discriminatory harassment, or retaliation.
2. Overview of New York’s Special NDA Rules for Misconduct Claims
New York General Obligations Law Section 5-336 governs confidentiality clauses in agreements that resolve claims involving unlawful discrimination, including discriminatory harassment and retaliation. Recent amendments broadened and strengthened these protections.
Key features of the law include:
- Restrictions on when confidentiality can be included in discrimination, harassment, or retaliation settlements.
- Bans on certain punitive terms, such as liquidated damages and forfeiture provisions tied to NDA breaches.
- Explicit coverage for independent contractors as well as employees and applicants.
- Requirements that employees receive time to consider confidentiality terms in many situations.
- Protection of an employee’s right to report misconduct to government agencies and law enforcement even if an NDA exists.
3. When Can an Employer Ask for Confidentiality in a Settlement?
If you are resolving a workplace dispute that involves allegations of unlawful discrimination, harassment, or retaliation, New York law places conditions on any clause that would keep the facts confidential.
3.1 Claims Covered by the Law
The statute applies broadly to agreements resolving:
- Claims of unlawful discrimination based on protected characteristics (for example, race, sex, disability, age, religion, and others under New York and federal law).
- Claims of discriminatory harassment – harassment connected to a protected characteristic.
- Claims of retaliation for complaining about or opposing discrimination or harassment.
The law is not limited to lawsuits. It also applies to pre-litigation settlement agreements, internal complaint resolutions, and other forms of negotiated resolution.
3.2 The Employee’s Choice on Confidentiality
In disputes that fall under Section 5-336, confidentiality about the factual allegations cannot be unilaterally imposed by the employer. New York requires that:
- Any provision that prevents disclosure of the underlying facts must be the employee’s preference, not simply the employer’s demand.
- The employee must receive a written copy of the confidentiality term and a period of time to consider whether to agree to it before signing.
These safeguards are designed to ensure that workers are not pressured into silence about unlawful conduct, particularly in areas like sexual harassment that have serious public interest implications.
4. The 21-Day Consideration Period and Waiver Rules
Historically, New York required a non-waivable 21-day period for an employee to consider whether to accept confidentiality provisions in discrimination settlements. Amendments effective November 17, 2023, partly changed that approach.
| Context | 21-Day Consideration Requirement | Can the Employee Waive It? |
|---|---|---|
| Pre-litigation settlements (before a lawsuit is filed) | Employee must be given up to 21 days to consider a confidentiality provision. | Yes. The employee may choose to sign sooner and waive the full 21 days. |
| Settlements in active litigation (claims filed in court) | Employee must be given a 21-day consideration period for confidentiality. | No. The 21-day period remains mandatory and cannot be waived under the Civil Practice Law and Rules. |
Regardless of context, employees must usually also be given at least 7 days after signing to revoke their agreement to a confidentiality term, consistent with the structure of the statute. These timing rules exist so employees have a meaningful chance to consult counsel and think through the long-term implications of staying silent.
5. Provisions That Are Now Prohibited in New York NDAs
New York law now invalidates certain aggressive NDA-related provisions in agreements resolving discrimination, harassment, or retaliation claims. If any of these prohibited terms are included, the release of the discrimination-related claim itself may become unenforceable.
5.1 Liquidated Damages for Breaking Confidentiality
Settlements in these cases can no longer require an employee to pay liquidated damages for violating a nondisclosure or non-disparagement clause. Liquidated damages clauses often set a fixed penalty (for example, a set dollar amount per violation) and can strongly deter an employee from speaking out even in situations where disclosure would be legally protected.
5.2 Forfeiture of Settlement Payments
Agreements cannot state that the employee will forfeit all or part of the settlement consideration if they violate a nondisclosure or non-disparagement clause. This means a settlement payment cannot be conditioned on permanent silence, with the risk that any disclosure—no matter how minor or protected—would cause the employee to lose the money.
5.3 Forced Disclaimers About Discrimination
Employers can no longer require employees to sign an affirmative statement or disclaimer saying that they were not in fact subject to discrimination, harassment, or retaliation. Such clauses are now banned in agreements resolving these types of claims.
If a settlement contains any of these prohibited terms, Section 5-336 provides that the release of discrimination-related claims is not enforceable against the worker.
6. Who Is Protected: Employees, Applicants, and Contractors
Originally, New York’s NDA restrictions applied primarily to employees and job applicants. Amendments that took effect on November 17, 2023, expanded the law’s scope to explicitly cover independent contractors as well.
This change aligns with broader protections under the New York State Human Rights Law, which already extended anti-discrimination coverage to many non-employee workers, including contractors, subcontractors, temporary workers, and gig workers. Under the updated rules:
- Employees, prospective employees, and independent contractors are all covered when resolving discrimination, harassment, or retaliation claims.
- An NDA that restricts factual disclosure of potential discrimination is void and unenforceable as to these individuals if it fails to satisfy statutory requirements (including notice of reporting rights).
7. Your Right to Report Misconduct Despite an NDA
Even when a New York NDA is valid, it cannot block you from reporting misconduct to government agencies or law enforcement. Under Section 5-336 as amended, employers must inform individuals that any confidentiality clause does not prevent them from speaking to certain authorities.
Employees must be clearly notified of their right to contact, among others:
- The New York Attorney General
- Law enforcement agencies
- The Equal Employment Opportunity Commission (EEOC)
- The New York State Division of Human Rights
- Local human rights commissions
- An attorney retained by the employee, applicant, or contractor
If the agreement lacks this notification and attempts to prevent disclosure of factual information related to any future discrimination claim, the restrictive provision is considered void and unenforceable.
8. Business NDAs vs. Settlements in Misconduct Cases
It is important to distinguish between ordinary business NDAs and those linked to discrimination or harassment disputes:
- Business confidentiality agreements that protect trade secrets or proprietary information remain generally enforceable if they are reasonably limited in scope, duration, and subject matter.
- Settlement-related NDAs involving discrimination, harassment, or retaliation face the specific constraints in Section 5-336 and must comply with the rules outlined above.
For example, an NDA that prevents an employee from sharing client lists or source code is typically not affected by Section 5-336. By contrast, an NDA that prevents an employee from ever discussing a sexual harassment complaint or the facts of a discrimination charge is heavily regulated and may be unenforceable if it does not comply with New York law.
9. Practical Tips Before Signing a New York NDA
If you are presented with an NDA or a settlement agreement containing confidentiality provisions related to a workplace dispute, consider these practical steps:
- Identify the nature of your claims – If your dispute involves discrimination, harassment, or retaliation, the protections of Section 5-336 likely apply.
- Review for prohibited terms – Look for liquidated damages, forfeiture clauses tied to NDA breaches, or any statement that you were not subject to discrimination; these may render the release unenforceable.
- Confirm your reporting rights – The agreement should clearly say you can still report to government agencies, law enforcement, or your attorney. If this language is missing, some provisions may be void.
- Use your consideration period – In most cases you have up to 21 days pre-litigation (waivable) or a mandatory 21 days during litigation to evaluate confidentiality terms. Speaking with an employment lawyer during this time can be critical.
- Distinguish business secrets from misconduct facts – Understand which parts of the NDA relate to proprietary business information, and which seek to limit what you can say about alleged unlawful conduct.
- Consider long-term impact – Confidentiality can affect your future job prospects, your ability to discuss your experience, and your role in any future investigations or lawsuits involving the employer.
10. Frequently Asked Questions About New York Workplace NDAs
10.1 Are all NDAs in New York still enforceable?
No. While NDAs that protect legitimate business interests (like trade secrets) are generally enforceable if reasonably drafted, New York imposes strict limits on NDAs used in agreements resolving claims of unlawful discrimination, harassment, or retaliation. Provisions that violate Section 5-336 may be void, and in some cases the release of claims may be unenforceable.
10.2 Can my employer stop me from talking to a government agency?
No. Under New York law, an NDA cannot prevent you from communicating with the New York Attorney General, the EEOC, the State Division of Human Rights, law enforcement, or similar bodies about possible discrimination or harassment. Current law also requires employers to affirmatively inform you of this right in agreements that restrict disclosure of factual information related to potential discrimination.
10.3 If I violate a settlement NDA, can I lose my entire payment?
For agreements resolving discrimination, harassment, or retaliation claims, employers can no longer require you to forfeit all or part of your settlement payments simply for violating a nondisclosure or non-disparagement clause. Clauses that impose forfeiture or liquidated damages in those circumstances are prohibited, and including them may render the release of claims unenforceable.
10.4 Do these protections apply if I am a freelancer or contractor?
Yes. New York has extended Section 5-336 to cover independent contractors in addition to employees and job applicants. Many contractors are also covered by the New York State Human Rights Law when it comes to discrimination and harassment protections.
10.5 Can I choose to keep my case confidential?
Yes. The law is designed to prevent forced silence, not to ban confidentiality altogether. You can choose to agree to a confidentiality provision if it is your preference and the agreement complies with statutory requirements, including the consideration period and notice provisions. Some individuals prefer confidentiality for personal or professional reasons, and New York law allows them to make that choice voluntarily.
10.6 Should I talk to a lawyer before signing?
Because NDAs and settlement agreements can significantly affect your legal rights and future options, many employees find it important to consult with an employment attorney experienced in New York law. An attorney can help interpret the specific language, identify problematic clauses, and negotiate changes where appropriate.
References
- New York General Obligations Law § 5-336 — New York State Legislature/Justia. 2025. https://law.justia.com/codes/new-york/gob/article-5/title-3/5-336/
- Amendments to New York’s NDA Law — Foley & Lardner LLP. 2024-01-09. https://www.foley.com/insights/publications/2024/01/amendments-new-york-nda-law/
- New York imposes significant restrictions on non-disclosure and non-disparagement provisions in release agreements involving claims of discrimination, harassment, or retaliation — DLA Piper. 2023-12-01. https://knowledge.dlapiper.com/dlapiperknowledge/globalemploymentlatestdevelopments/2023/New-York-restrictions-on-non-disclosure-and-non-disparagement-provisions.html
- New York Further Limits Scope of Non-Disclosure Agreements in Settlements of Discrimination Claims — Katz Banks Kumin. 2023-12-05. https://katzbanks.com/whistleblower-law-blog/ny-discrimination-nda-law/
- HRDef: The Secret Is Out: Updates to New York’s Non-Disclosure Law — Akerman LLP. 2023-12-21. https://www.akerman.com/en/perspectives/hrdef-the-secret-is-out-updates-to-new-yorks-non-disclosure-law.html
- New York Amends Law on Non-Disclosure Agreements in Settling Claims Related to Discrimination, Harassment and Retaliation — Wood, Smith, Henning & Berman LLP. 2024-01-02. https://www.wshblaw.com/experience-new-york-amends-law-on-non-disclosure-agreements-in-settling-claims-related-to-discrimination-harassment-and-retaliation
- What to Know About New York Non-Disclosure Agreements — SixFifty. 2023. https://www.sixfifty.com/blog/new-york-non-disclosure-agreements/
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