By Gregory S. Lisi, Esq. Lisa M. Casa, Esq. and Jane Chen, Esq.
Following the “#Me Too” movement, federal and state legislators have imposed heightened obligation on employers to prevent sexual harassment and to provide victims of sexual harassment more leverage to seek compensation.
Last December, Congress passed the Tax Cuts and Jobs Act of 2017 (the “Act”), which, in an effort to deter employers from using nondisclosure provisions in settlement agreements for sexual harassment claims, increased to cost of such agreements. Under the previous law, an employer was permitted to deduct settlement payments, attorneys’ fees and costs or their corporate taxes as a business expense. However, under the Act, businesses may no longer receive a deduction for: “(1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement; or (2) attorney’s fees related to such a settlement.” This provision applies to any settlement agreement entered after December 22, 2017.
New York State
In April 2018, the New York State legislature passed legislation to combat sexual harassment and heighten employer obligations in the workplace. Employers should be aware of the following obligations and restrictions imposed by this new law.
- Restrictions have been imposed on the use of non-disclosure provisions in settlement agreements settling claims of sexual harassment.
- No agreement, judgment, stipulation decree, agreement to settle, assurances of discontinuance or otherwise may include a non-disclosure provision for any claims, the factual foundation for which involves sexual harassment, unless it is the claimant’s preference to include such provision. The claimant must be provided with 21 days to consider the nondisclosure provision, and once the agreement is executed the claimant must be provided with 7 days to rescind the non-disclosure portion of the agreement.
- The law mandates all employers to distribute a written sexual harassment policy on or before October 9, 2018. Any sexual harassment policy must:
- Prohibit sexual harassment;
- Provide examples of conduct that would constitute unlawful sexual harassment;
- Include information concerning the federal and state statutory provisions concerning sexual harassment and remedies available to victims of sexual harassment;
- Outline employees’ rights of redress and all available forums for adjudicating complaints;
- A complaint form;
- Include a procedure for the timely and confidential investigation of complaints that ensures due process for all parties;
- Inform employees of their rights of redress and all available forums for adjudicating sexual harassment complaints administratively and judicially;
- Clearly state that sexual harassment is considered a form of employee misconduct and that sanctions will be enforced against individuals engaging in sexual harassment and against supervisory and managerial personnel who knowingly allow such behavior to continue; and
- Clearly state that retaliation against individuals who complain of sexual harassment or who testify or assist in any investigation or proceeding involving sexual harassment is unlawful.
- Requires all employers to provide annual training for the prevention of sexual harassment.
- Prohibits employment contracts and agreements from including a mandatory arbitration clause for any allegation or claim of an unlawful discriminatory practice of sexual harassment.
- Expands protections against sexual harassment to contractors, subcontractors, vendors, consultants, and other persons providing services under a contract.
New York City
In April 2018, the New York City Council passed the “Stop Sexual Harassment in NYC Act.” The requirements of this Act, which applies to any employer with employees working in New York City’s five boroughs are highlighted below:
- Effective September 1, 2018, all private employers with 15 or more employees are required to conduct “interactive” annual anti-sexual harassment training.
- For new hires, training must be conducted within 90 days of the initial hire.
- The training requirement extends to interns.
- Employers must display an anti-sexual harassment poster, to be displayed in a conspicuous location where employees are gathered, which outlines policies and procedures, designed by the New York City Commission on Human Rights, and provide new hires with an information sheet on sexual harassment.
- The statute of limitation for filing gender harassment claims with the New York City Commission on Human Rights is extended from 1 year to 3 years.
- Renders any provision mandating arbitration for any claims of gender discrimination or sexual harassment null and void. While this provision will likely by challenged in the federal courts as preempted by the Federal Arbitration Act, it is still part of the statute and must be considered in employers’ anti-sexual harassment strategy going forward.
Employers in New York will need to review and update their existing policies and training to ensure that they are complying with the new regulatory requirements imposed by both the State and City. Please contact Gregory S. Lisi, Esq., head of the Labor and Employment Department at Forchelli Deegan Terrana to have your policies, handbooks and training reviewed today.