BILL NUMBER: S7819

SPONSOR: GOUNARDES
 
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 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 a condition
of such release, the employee or independent contractor is barred from
applying for or accepting future employment with the employer, 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.

 
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 work 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
become law.

                                
 
BILL NUMBER: S7819A

SPONSOR: GOUNARDES
 
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 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 a condition
of such release, the employee or independent contractor is barred from
applying for or accepting future employment with the employer, 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.

 
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
become law.