Makes the release of any claim by an employee, or independent contractor who is a natural person, against an employer, unenforceable if, as a condition of such resolution, the employee or independent contractor is prohibited from applying for, accepting, or engaging in future employment with such employer, or any entity or entities related to such employer.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A306
SPONSOR: Cruz TITLE OF BILL:
An act to amend the general obligations law, in relation to the release
of certain claims by certain employees
PURPOSE OR GENERAL IDEA OF BILL:
This bill bans "no-rehire" clauses in settlement contracts between
employers and employees.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 of the bill adds a new section 5-338 to General Obligations
Law to provide that no release of a claim made by an employee or inde-
pendent contractor against an employer shall be valid if, as part of the
agreement resolving the claim, the employee or independent contractor is
barred from applying for or accepting future employment with the employ-
er or any entities related to the employer.
Section two provides that this act shall take effect on the sixtieth day
after it shall have become law and apply to all agreements entered into
after this date.
JUSTIFICATION:
This legislation bans "no rehire" clauses in settlement agreements for
employees or independent contractors that have filed a claim against
their employer. These clauses, which bar an aggrieved employee or
contractor from ever applying or working for the defendant employer
again, were initially created to protect employers from retaliation
claims in the event that an unscrupulous plaintiff would win a settle-
ment, reapply for his or her old job, and then sue the company again
when he or she is not hired. From the perspective of an aggrieved
employee who has been a victim of harassment, however, these clauses are
overly broad in two ways: firstly, they apply to any employer regardless
of size, including multinational corporations with millions of open
positions across the country (and one may in fact argue that larger
employers are more likely to include these provisions in their employ-
ment contracts to begin with). Secondly, no rehire clauses prohibit
employment at any other entity that may purchase or be purchased by the
defendant employer. With more than 12,000 mergers and acquisitions in
2019 alone, these clauses have become de facto non-competes for employ-
ees that are locked out of entire industries.
This legislation would allow New York to follow the lead of other
progressive states such as California and Vermont in rendering settle-
ment contracts unenforceable if they contain no rehire clauses. The
bill would not, however, prohibit any termination of employment mutually
agreed upon as part of a settlement, nor would it automatically force a
defendant employer to rehire an employee who had previously settled a
case against the employer. The language of the bill simply safeguards
victims' abilities to explore future employment options by barring
employers from including no rehire provisions in their settlement
contracts at the outset.
While New York has made sweeping progress in the fight against workplace
discrimination and harassment with the passage of recent legislation,
the fact that no rehire clauses are so widely used demonstrates that
there is still more to be done. This legislation if enacted would make a
strong statement that, until every workplace within our state's borders
is 100% free of discrimination, we will not shield harassing workplaces
at the expense of the victims of such harassment.
PRIOR LEGISLATIVE HISTORY:
New bill.
FISCAL IMPLICATIONS:
To be determined.
EFFECTIVE DATE:
This act shall take effect on the sixtieth day after it shall have.
STATE OF NEW YORK
________________________________________________________________________
306
2023-2024 Regular Sessions
IN ASSEMBLY
January 4, 2023
___________
Introduced by M. of A. CRUZ, L. ROSENTHAL, SIMON, EPSTEIN, MAMDANI,
BICHOTTE HERMELYN, FAHY, GONZALEZ-ROJAS, SEAWRIGHT, DINOWITZ, PAULIN
-- read once and referred to the Committee on Judiciary
AN ACT to amend the general obligations law, in relation to the release
of certain claims by certain employees
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The general obligations law is amended by adding a new
2 section 5-338 to read as follows:
3 § 5-338. Release of certain employee claims. 1. For purposes of this
4 section, the following terms shall have the following meanings:
5 (a) "Employer" shall mean all public and private employers within the
6 state.
7 (b) "Employee" shall mean all public and private employees within the
8 state.
9 2. No release of any claim by an employee, or independent contractor
10 who is a natural person, against an employer, is enforceable if, as part
11 of the agreement resolving such claim, the employee or independent
12 contractor is prohibited from applying for, accepting, or engaging in
13 future employment with such employer, or any entity or entities related
14 to such employer. The provisions of this section shall not preclude an
15 employee and employer from agreeing to terminate an existing employment
16 relationship as part of a settlement of a claim. If a release of a
17 claim is rendered unenforceable pursuant to this section, the employer
18 shall remain bound by all other provisions of the settlement agreement,
19 including the obligation to provide the full consideration to the
20 employee as set forth in the agreement.
21 § 2. This act shall take effect on the sixtieth day after it shall
22 have become a law and shall apply to all agreements entered into on and
23 after such date.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD01493-01-3
