BILL NUMBER: S413

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:

To ban "no-rehire" clauses in settlement contracts between employers and
employees

 
SUMMARY OF PROVISIONS:

Section one 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
on and after such 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 their old job, and then sue the company again when
they are 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 employment contracts to
begin with). Secondly, no rehire clauses prohibit employment at any
other entity that may purchase or be purchased by the defendant employ-
er. With more than 12,000 mergers and acquisitions in 2019 alone, these
clauses have become de facto non-competes for employees 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 in recent years, 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:

2024: S14 - Passed Senate, died in Assembly

2023: S14 - Passed Senate, died in Assembly

2022: S766 - Passed Senate, died in Assembly

2021: S766 - Passed Senate, died in Assembly

2020: S7819B - Referred to Judiciary

 
FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect on the sixtieth day after it shall have
become law.