Both the New York State Legislature and the New York City Council recently adopted new legislation targeting sex discrimination and sexual harassment in the workplace. While the federal response to the #MeToo movement has been relatively limited, states and localities are pushing forward with a reform agenda in 2018 that generally expands employee protections and available remedies for unlawful harassment. Employers with New York operations should become fluent in the new requirements and prepare for increased government oversight of their harassment prevention policies and programs.
New York State
The New York State Legislature included a number of sexual harassment-related initiatives in the State’s 2018-2019 budget,1 which Governor Cuomo is expected to sign. The Governor issued a press release highlighting the new measures as “the strongest and most comprehensive anti-sexual harassment protections in the nation.” The key provisions are described below.
- Mandatory Sexual Harassment Training and Policy
Many New York employers already train managers regarding sexual harassment and non-discrimination. Fewer train all employees, and fewer still do so annually. However, the new budget measures amend State Labor Law to require that all New York employers, regardless of their size, provide sexual harassment training annually to all employees and provide employees with a written non-harassment policy.2 The State Department of Labor is charged with developing a model non-harassment policy as well as a model training program, in consultation with the State Division of Human Rights, though there is no stated timetable for the publication of these model documents. Employers may either adopt the state’s forthcoming model policy, once available, or, if necessary, revise their own policies to meet the specified threshold requirements. Notably, employers must also develop and publish “a standard complaint form” that employees can use to make sexual harassment claims as well as inform employees in writing of “all available forums for adjudicating sexual harassment complaints administratively and judicially.” In addition, the legislation also requires that non-harassment training be interactive. It is not clear yet what is meant by “interactive,” or how employers with large workforces will be expected to comply with the interactive requirement.
This section will take effect 180 days after the legislation is signed.
- Expanding Protections for Non-Employees
The new state legislation broadens protection under the State Human Rights Law for non-employees, providing that an employer may be liable for sexual harassment of contractors, subcontractors, vendors and consultants where the employer knows or should know that harassment is occurring in its workplace and fails to take immediate and appropriate corrective action to stop the offending conduct.3
This section of the law will become effective immediately after the governor signs it.
- Bidders for State Contracts Must Affirm Compliance with Non-Harassment Requirements
Companies that bid for New York State contracts must submit an affirmation with their bid stating, under penalty of perjury, that they have complied with the state’s annual sexual harassment training requirement and written policy requirement.4 Any bid that does not include this affirmation will not be considered for a government contract.
This section will take effect on January 1, 2019.
- Arbitration Clauses
Many New York employers have adopted mandatory arbitration policies, preventing employees from bringing court actions over certain workplace disputes and instead moving those disputes to arbitration. Arbitrations are not public, and are often less expensive than a court proceeding.
The new state budget would prohibit arbitration clauses from applying to sexual harassment claims. Specifically, the state bill prohibits “any clause or provision in any contract which requires as a condition of the enforcement of the contract or obtaining remedies under the contract that the parties submit to mandatory arbitration to resolve any allegation or claim of an unlawful discriminatory practice of sexual harassment.”5 This measure seeks to enable employees to pursue private actions related to sexual harassment, as it both applies to future contracts and purports to declare existing arbitration clauses “null and void,” except where there is a conflict with a collective bargaining agreement or an inconsistency with federal law.
The reach of this measure may be limited, however, to the extent that it is found to be preempted by the Federal Arbitration Act (FAA). The FAA generally applies to arbitration contracts involving interstate commerce unless the parties have explicitly agreed otherwise, and reflects a preference for arbitration as a means of resolving disputes efficiently and decreasing the burden on courts. Of course, preemption is not self-enforcing; the party seeking to arbitrate (typically, the employer) often must make a motion to compel arbitration on the basis of preemption. In addition, given the increased push for transparency in response to the #MeToo movement, several employers have declared that they will no longer seek to arbitrate sexual harassment claims. Nonetheless, except where an arbitration clause provides that the parties will arbitrate according to Article 75 of the New York Civil Practice Law and Rules, or the transportation worker exception to the FAA applies, this “prohibition” may have little impact.
This section will take effect 90 days after the bill is enacted.
- Non-Disclosure Agreements
Settlements of sexual harassment claims typically include non-disclosure or confidentiality clauses limiting disclosure of the terms of the agreement, and in certain cases even the fact of the agreement. The new state budget legislation prohibits non-disclosure agreements (NDAs) within any written resolution of a sexual harassment claim unless it is the expressed “preference” of the employee.6 In order to demonstrate this preference, the employee must be provided with a non-waivable 21-day waiting period as well as a seven-day revocation period. After the 21 days have passed, the employee must specifically affirm a preference for confidentiality. This is unlike the 21-day waiting period imposed by the Older Workers’ Benefit Protection Act in relation to the settlement of federal age discrimination claims, which the employee may waive at his or her option.
Readers may recall that the Federal Tax Cuts and Jobs Act of 2017 also seeks to limit the use of non-disclosure clauses by providing that, where one is included in a settlement of sexual harassment claims, the employer may not treat any settlement payments as tax deductible, nor may either party deduct any attorneys’ fees or litigation expenses related to such a settlement. The ability to deduct settlement-related payments may well be a more significant determinant of whether employers choose to secure NDAs than the burden of complying with the new state requirement.
This section will take effect 90 days after the legislation becomes effective.
New York City Legislation
On April 11, 2018, the New York City Council passed 11 separate bills relating to sexual harassment, which Mayor Bill de Blasio is expected to sign into law in the coming weeks. Fortunately for New York City employers, many of the requirements overlap with the new state provisions. The most notable provisions are listed below.
- Mandatory Sexual Harassment Training
Like the state budget bill, the city legislation also requires interactive workplace anti-harassment training for all employees. The training must occur within the first 90 days of hire. It must include all of the typical elements of anti-harassment training, including emphasizing that retaliation is prohibited. The city will develop and provide a free online training that employers may utilize if they do not adopt other programs. Employers are required to keep a record of this training, including a signed employee acknowledgment, which must be maintained for three years. An employer whose training program already meets these requirements may submit a certification of compliance.
This local law will take effect on April 1, 2019.
- Extended Statute of Limitations and Universal Coverage
Employees will now have three years to file a claim of “gender-based harassment” under the New York City Human Rights Law. Previously, the statute of limitations was a year from the date of the alleged conduct. In addition, the new measures extend the reach of the Human Rights Law with respect to sexual harassment so that employers of all sizes are covered (as under the New York State Human Rights Law). Previously, only employers with four or more employees were subject to this provision.
This local law will take effect immediately upon enactment.
- Required Handout and Poster
Employers will be required to post an “anti-sexual harassment rights and responsibilities” poster in both English and Spanish in a workplace common area. The city will issue an approved poster that employers can download and post.
Employers will also be required to issue an information sheet to all new hires. Alternatively, an employer can simply ensure that the requirements of the bill are included in its handbook and issue all new hires a company handbook, which is already customary.
This local law will take effect 120 days after enactment.
There is no doubt that the #MeToo movement is bringing changes to New York workplaces. It is critical to keep up with these rapidly changing requirements and to review and update workplace policies and training schedules to maintain compliance.