Are non-disparagement clauses in NDAs void under recent labor laws in New York?

Are Non-Disparagement Clauses Void in New York?

Yes, non-disparagement clauses are effectively void in New York settlement agreements involving claims of discrimination, harassment, or retaliation, unless the provision is the complainant's preference. Furthermore, federal labor law under the NLRB prohibits broad non-disparagement clauses that interfere with an employee's right to discuss working conditions.

Key takeaway: If a non-disparagement clause prevents you from discussing unlawful workplace conduct or exercising your Section 7 rights under the NLRA, it is likely unenforceable and potentially illegal.

The New York State Landscape

New York has aggressively legislated against the use of non-disclosure and non-disparagement agreements to silence victims of workplace misconduct. The primary statute governing this is Section 5-336 of the New York General Obligations Law.

Key Requirements for Enforceability

For a non-disparagement clause to be included in a settlement agreement involving discrimination or harassment, the following criteria must be met:

• The clause must be the complainant's preference.
• The complainant must be provided with at least 21 days to consider the agreement.
• The complainant must have a 7-day revocation period after signing.
• The agreement must be in plain English and understandable to the average person.

If these procedural requirements are not strictly followed, the non-disparagement clause is void as a matter of law. Action item: If you are presented with a settlement agreement, verify that the 21-day consideration period is explicitly stated in the document.

Federal Limitations: The NLRB Stance

Beyond state-specific laws, the National Labor Relations Board (NLRB) issued a landmark decision in McLaren Macomb. This ruling clarified that offering employees severance agreements with broad non-disparagement and non-disclosure clauses violates the National Labor Relations Act (NLRA).

What Makes a Clause Unlawful?

The NLRB's position is that employees have a protected right to discuss their wages, hours, and working conditions. Any clause that threatens to penalize an employee for speaking out on these topics is considered coercive. Action item: Review your existing contracts for "catch-all" disparagement language that does not explicitly carve out protected concerted activity.

How to Identify Red Flags in Your Contract

When reviewing an NDA or a severance agreement, look for these specific indicators of overreach:

1. Lack of Carve-outs: The agreement fails to state that the clause does not apply to communications with the EEOC, NLRB, or other government agencies.
2. Broad Definitions: The term "disparagement" is not defined, leaving it open to interpretation that could include legitimate complaints about safety or pay.
3. Perpetual Obligations: The restriction lasts "forever" without any sunset provision.
4. Liquidated Damages: The contract includes massive financial penalties for a single "disparaging" comment.

Key takeaway: A non-disparagement clause that lacks a "carve-out" for protected government reporting is a major red flag and is likely unenforceable in most jurisdictions.

Steps to Take if You Encounter a Problematic Clause

If you identify a non-disparagement clause that appears to violate New York or federal law, follow these steps:

1. Document the Context: Note whether the agreement is part of a settlement or a standard employment contract.
2. Seek Counsel: Consult with an employment attorney to determine if the clause is severable or if it invalidates the entire agreement.
3. Request Revisions: Propose language that explicitly protects your right to discuss working conditions and report misconduct to authorities.
4. Use Analysis Tools: Leverage technology to compare your contract against current legal benchmarks.

TermScore provides an automated, AI-driven analysis of your contracts, instantly flagging non-disparagement clauses that conflict with New York labor laws or federal NLRB standards. By uploading your document, you can identify high-risk language in seconds, ensuring you are fully informed before you sign.