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New York State Employment Law Update (Part 3)


New York State Employment Law Update (Part 3)

Key Takeaways:

  • New York codifies employee intellectual property rights

  • New York prohibits liquidated damages provisions in certain non-disclosure agreements

  • New York prohibits employers from requesting access to employees/applicants electronic personal accounts

New York Codifies Employee Intellectual Property Rights

Gov. Hochul signed S5640/A5295 enacting New York Labor Law Section 203-f, which renders any employment agreement unenforceable if it requires employees to assign the rights to inventions developed using the employee’s own property and time. The law does specify exemptions for intellectual property created with actual or demonstrably anticipated research of the employer, or from work performed by the employee in the course of their work for the employer.

The law became effective immediately when it was signed by Gov. Hochul in the Fall of 2023. It highlights the importance for employers to clearly delineate the scope of employee duties that are involved in developing products, services, or technologies that potentially have intellectual property value.

New York Prohibits Liquidated Damages Provisions in Certain Non-Disclosure Agreements

General Obligations Law Section 5-336 was enacted in 2018 with the intent of limiting an employer’s authority to include or agree to include in any settlement, agreement or other resolution of any claim, the factual foundation for which involves discrimination, any term or condition that would prevent the disclosure of the underlying facts and circumstances to the claim or action.

Gov. Hochul recently signed S4516/A581, amending General Obligations Law Section 5-336. The law includes a change indicating that the 21-day period that an employee is given to consider an agreement that keeps the underlying facts and circumstances of a discrimination, harassment, or retaliation claim confidential, is now waivable if it is pre-litigation. This is because the law changes the language in General Obligations Law Section 5-336 to state “up to twenty-one days,” but did not change Civil Practice Law & Rules 5003-b, which continues to include the language “shall have twenty-one” days. The law also adds that it applies to employees and independent contractors.

Finally, the law enacts a subsection c(3) to General Obligations Law Section 5-336, which prohibits the following from a release of a covered claim:

  1. Clauses where the complainant is required to pay liquidated damages for violations of non-disclosure or non-disparagement clause.
  2. Clauses where the complainant is required to forfeit all or part of the consideration for the agreement for a violation of a non-disclosure or non-disparagement clause.
  3. Clauses that contain or require any affirmative statement, assertion, or disclaimer by the complainant that the complainant was not in fact subject to unlawful discrimination, harassment, or retaliation.

The newly enacted subsection c(3) has an arguably narrower application than other portions of the statute. Specifically, General Obligations Law Section 5-336(c) uses the phrasing “if as a part of the agreement resolving such claim,” whereas General Obligations Law Section 5-336(a) refers to “any settlement, agreement or other resolution of any claim.” As a result, there is currently ambiguity as to the whether the amendments apply to a typical severance agreement with a general release, where no claim of discrimination has been asserted by the employee. As of the date of this alert, New York State has not updated its FAQs on these amendments.

This law is effective immediately. Employers should review their agreements that include a release of employment claims in light of these amendments.

New York Prohibits Employers from Requesting that Employees/Applicants Provide Access to Electronic Personal Accounts

Gov. Hochul signed S2518A/A836, enacting New York Labor Law Section 201-h.

The law imposes restrictions on employers from forcing applicants/employees from providing employers with access to electronic personal accounts, such as social media websites.

There are a number of exceptions to the law, which focus on the employers continued right to access such accounts if they relate to the employer’s business, or if it is needed for compliance with a court order. Employers continue to be allowed to view information on applicant/employee social media accounts that are available publicly.

The law is effective on March 12, 2024. Employers are advised to review this law in conjunction with their hiring practices.

For more information or immediate guidance, contact:

Refer to part 1 of this four part alert series here.

Refer to part 2 of this four part alert series here.