The #MeToo movement has brought about not only social awareness, but also legal change to provide employees with additional protections aimed at stamping out sexual harassment in the workplace.

At the federal level, the recently enacted tax bill prevents tax deductions for payments for settlements “related to sexual harassment” if the payment is subject to a nondisclosure agreement. At state and local levels, New York and Maryland are leading the vanguard on additional protections, including prohibiting pre-dispute arbitration agreements and requiring training and reporting for sexual harassment claims.

On April 12, 2018, Gov. Andrew Cuomo signed the New York state budget for fiscal year 2018-2019, which included a number of provisions aimed at addressing sexual harassment in the workplace. The significant provisions of the bill include the following:

  • Employers are prohibited from including in any contract pre-dispute mandatory arbitration clauses for claims or allegations of sexual harassment.
  • Settlement agreements may not prevent disclosure of underlying facts and circumstances of sexual harassment unless the claimant voluntarily agrees to such a provision after being provided 21 days to consider it and seven days after execution to revoke it.
  • All New York employers must either adopt the model policies and programs regarding sexual harassment and training to be published by the New York State Department of Labor, or establish their own policies and programs that meet or exceed the model provisions.
  • Employers may be liable for sexual harassment of contractors, subcontractors, vendors or other persons providing services pursuant to a contract under the New York State Human Rights Law when the employer “knew or should have known” that such an individual was subjected to sexual harassment in the employer’s workplace.

These provisions all have different effective dates. The requirements regarding arbitration and nondisclosure agreements are effective July 11, 2018. Employers must have sexual harassment policies and training in place by Oct. 9, 2018.

Similarly, New York City recently passed the Stop Sexual Harassment in NYC Act, which contains a number of provisions that are comparable to the state provisions; however, a few go further to expand protections for employees and place additional requirements on employers. These provisions await Mayor Bill de Blasio’s signature. Here are the most significant provisions affecting employers:

  • Each employer in New York City with 15 or more workers must provide interactive workplace anti-harassment training for all employees annually and within 90 days of hire, and must maintain records of this training for three years.
  • The statute of limitations for filing administrative claims related to sexual harassment under the New York City Human Rights Law was extended from one year to three years, and the Human Rights Law’s sexual harassment provisions were expanded to include all employers, instead of only employers with four or more employees.
  • Each New York City employer also will be required to post in workplace common areas English and Spanish versions of anti-sexual harassment posters outlining employees’ rights and responsibilities, and use an information sheet or include the required information in its handbook, to be provided to employees at the time of hire.

The workplace training requirements are set to begin April 1, 2019. The increased statute of limitations will become effective upon enactment, and the poster and handout requirements will begin 120 days after enactment.

On April 4, 2018, the Maryland General Assembly passed the Disclosing Sexual Harassment in the Workplace Act of 2018, which contains two main provisions. First, similar to the New York legislation, it prohibits employers from requiring employees to enter into any agreement that waives any “substantive or procedural right or remedy” to a sexual harassment claim that accrues in the future (e.g., requiring arbitration). Second, this bill includes a reporting requirement for sexual harassment claims. Starting July 1, 2020, each employer with 50 or more employees must submit a survey response to the Maryland Commission on Civil Rights setting forth the following:

  • The number of settlements made by or on behalf of the employer after an allegation of sexual harassment by an employee.
  • The number of times the employer has paid a settlement to resolve a sexual harassment allegation against the same employee over the past 10 years of employment.
  • The number of settlements made after an allegation of sexual harassment that included a provision requiring both parties to keep the terms of the settlement confidential.
  • Whether the employer took a personnel action against an employee who was the subject of a settlement included in the survey.

If signed or permitted to go into law by Gov. Larry Hogan, this bill becomes effective Oct. 1, 2018. Notably, the reporting requirement of the law has a sunset provision and will remain effective only until July 30, 2023, unless extended by the legislature.

In preparation for the anticipated enactment and effective dates of these new bills, Maryland and New York employers should review their policies and practices related to sexual harassment. Employers also should remain aware of further developments regarding the arbitration and settlement provisions. Open questions remain as to whether the anti-arbitration rules for sexual harassment claims will be enforceable in light of the Federal Arbitration Act, and how the tax and nondisclosure requirements will be handled in the context of general releases of all claims including sexual harassment claims.