In the wake of national media coverage of sexual harassment claims and the #metoo movement, New York State and City lawmakers have proposed legislation placing more obligations on employers to address sexual harassment in the workplace and to restrict mechanisms for resolving claims of sexual harassment. New York employers should review existing policies in light of the proposed legislation and be prepared to modify existing policies and practices if the proposed legislation is enacted. The following summarizes the potential impact that legislation would have on private sector employers.

Legislation Affecting New York State Employers

The New York State budget bill for fiscal year 2019 (the “Bill”) contains a host of legislation affecting how employers address the issue of sex-based workplace harassment.

First, the Bill prohibits employers and employees from agreeing to confidential arbitration as a mechanism for resolving claims of sexual harassment, “[e]xcept where inconsistent with federal law.”1 However, the United States Supreme Court ruled in 2012 that, “when state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the [Federal Arbitration Act (the ‘FAA’)],” thereby rendering the state law unenforceable.2 Accordingly, it remains to be seen whether any part of this provision of the Bill may be reconciled with federal law (or whether, instead, it is pre-empted by federal law and, therefore, void and unenforceable). Notwithstanding its evident conflict with the FAA, this portion of the Bill is to become effective the ninetieth day after Governor Cuomo signs it into law.

Second, the Bill prohibits nondisclosure provisions in the “resolution of any claim, the factual foundation for which involves sexual harassment,” unless the inclusion of a confidentiality provision is the preference of the complainant. The Bill calls for the complainant to be afforded twenty-one (21) days to consider the confidentiality provision prior to execution, and an additional seven (7) days after execution in which the complainant may revoke the agreement.3 This part of the Bill has the potential to carry with it unintended consequences. For example, it is frequently the case that an employer elects to resolve a claim of workplace sexual harassment, not because that claim has any basis in fact, but because the employer does not wish to incur the expense attendant to defeating the claim. Under the Bill, with no guarantee of confidentiality afforded any such settlement absent employee consent, employers may elect to litigate disputes they would otherwise settle under confidential terms in order to demonstrate the falsity of such claims, thereby incurring significant added expenses.

Third, under the Bill, the New York State Department of Labor (the “NYSDOL”) is to consult with the New York State Division of Human Rights (“NYSDHR”) to create and publish a model sexual harassment prevention policy which will establish a “floor” below which the policies of all New York employers may not fall. Employers must either implement the model policy or establish and provide to employees their own written policy that equals or exceeds the minimum standards to be provided by the NYSDOL. Additionally, the NYSDOL, in consultation with the NYSDHR, is to produce an interactive model sexual harassment prevention training program which is to include the following: an explanation of sexual harassment; examples of conduct that would constitute unlawful sexual harassment; information on the law and remedies provided for victims of sexual harassment; employees’ rights to address claims of sexual harassment; and training on the additional responsibilities of supervisors. Every employer in New York will be required to either use the model training program or establish its own that meets or exceeds the minimum standards provided by the DOL’s model. Similar to laws in California,4 Connecticut,5 and Maine,6 the Bill mandates that employers provide such training – in this case, on an annual basis, to all of their employees. Employers will be expected to be in compliance with this portion of the Bill within a year of its effective date, which is 180 days after it becomes law.

Fourth, the Bill imposes upon employers liability for sex-based harassment experienced by non-employees who provide services pursuant to a contract in the workplace (such as contactors, “freelancers,” vendors or consultants). This section of the Bill will be effective immediately upon being signed into law, and has the potential to impose upon employers in New York an unprecedented degree of liability for sexual harassment in the workplace.

Together, this raft of legislation (which Governor Cuomo has signaled he will sign into law, as he proclaimed this to be “the strongest and most comprehensive anti-sexual harassment protections in the nation”7) calls for fundamental changes in the way that employers prevent, address, and resolve claims of workplace sexual harassment.

Legislation Affecting New York City Employers

The New York City Council is considering similar legislation. Of the package of eleven bills recently proposed8, four directly impact private sector employers.

If passed, the legislation would require employers with fifteen or more employees to provide annual interactive anti-sexual harassment training for all of its employees who work more than 80 hours in a year and are employed in New York City, within one year of the law’s effective date, September 1, 2018. This legislation, which mandates topics of training substantially tracking those discussed above, also calls for training specifically geared to educating supervisors and managers regarding their responsibilities under relevant law. The bill also imposes civil penalties on those employers that do not maintain records reflecting their compliance with these training requirements. Similar to provisions in the Bill, the legislation calls for the New York City Commission on Human Rights (the “NYCCHR”) to develop interactive training modules that employers may use to satisfy the training requirement.

Moreover, the proposed legislation would amend the New York City Human Rights Law’s provisions against gender-based harassment to apply to any employer, irrespective of the number of employees, which is similar to its State equivalent.9

Additionally, the proposed legislation would extend the limitations period under which employees may assert claims of gender-based harassment with the NYCCHR from the current one-year period to three years from the time of the alleged conduct.

Under yet another bill, employers would be required to “conspicuously display an anti-sexual harassment rights and responsibilities poster [in English and in Spanish] designed by the [NYCCHR], in employee breakrooms or other common places employees gather.”10 Employers would also be required to provide employees with an information sheet on sexual harassment, developed by the NYCCHR, at the time of hire. Employers could face civil penalties for non-compliance.

Practical Advice

The practical effect of this legislation is to impose upon employers the duty to take specific steps to create and maintain a workplace free of sexual harassment – steps which many employers are already doing by providing training their its employees on a regular basis, developing clear policies, and addressing incidents of discriminatory or harassing conduct when they occur. Employers that do not already have these measures in place should work with counsel to introduce such policies and practices. Even in the unlikely event that none of the proposed legislation becomes law, it is important for all employers to convey to their employees that sexual harassment is unacceptable.

As noted above, it remains to be seen whether state and local laws prohibiting the arbitration of certain claims may be reconciled with federal law. With that said, it is a rare employer who is willing to incur the expense and disruption of challenging state and local legislation. In the absence of further guidance, employers should revise their written agreements to arbitrate disputes with employees to exclude claims of sexual harassment.

Finally, employers should work with counsel when addressing allegations of workplace sexual harassment to ensure that any agreement resolving such claims complies with applicable law. As this raft of legislation demonstrates, settlement agreement templates must be reviewed and updated regularly to ensure compliance with developing law.