On February 14, 2018, Law 7, which prohibits sexual harassment, mobbing (bullying), racism and discriminatory practices in all environments, including the workplace and academia, took effect. Law 7 also establishes liability and penalties for any acts of violence against a person’s honor, dignity, or physical or psychological integrity, and implements public policies aimed to prevent such conduct. Moreover, the law protects workers’ human rights, regardless of gender or age, and their rights to dignity and respect and to work under equitable conditions. Employers must be in full compliance under the new law by May 16, 2018.

Law 7 defines sexual harassment and mobbing as any systematic, continuous, or persistent action or omission through which a person suggests, invites, asks, pursues, limits, or restricts the exercise of another person’s rights, impairs their rights, insults or addresses them in a disrespectful manner, or humiliates them in order to obtain sexual favors or to affect the person’s dignity. This prohibited conduct occurs in situations involving labor exploitation or when an employer denies an individual’s equal employment opportunities, fails to apply the same selection criteria for all candidates, fails to honor the worker’s permanent employment status or general employment conditions, or unfairly discredits the work performed.

Racism is defined as the idea that a particular race is superior to another, and is exemplified through actions such as requiring a prospective candidate to have a “good appearance” to qualify for a specific job position. Sexism is defined as any attitude or action that undervalues, excludes, over-represents, or creates stereotypes because of the person’s gender.

Law 7 sets forth a new obligation for employers to implement an appropriate and effective in-house procedure to process and resolve complaints of this nature. The procedure may be developed and implemented through the internal work regulation approved by the Ministry of Labor, collective bargaining agreements or internal policies.

Additionally, employers must implement an investigation process for any complaints of conduct covered under this law. The investigation process must be effective, confidential, and undertaken expeditiously; cannot exceed a three-month period following the receipt of the complaint; and must end with a final written report of the investigation and its results. Furthermore, organizations are required to implement training, counseling, and orientation on the anti-discrimination and anti-harassment law.

Any violations of Law 7 committed by an employer (or the victim’s line supervisor)—whether the organization is a public or private institution, a union or professional association or social organization—is subject to a fine ranging from $550 to $1,000 per violation, notwithstanding the employee’s right to bring a lawsuit against the employer for any damages arising from the organization’s failure to conduct an effective investigation or to remedy the conduct once it has been reported.

Employer Considerations

Employers have until May 16, 2018 to comply with this new law. Given the short compliance window, employers with operations in Panama should consider taking the following steps:

  1. Implement appropriate and effective procedures to quickly acknowledge, respond to, and remedy any complaints of sexual harassment, mobbing, racism or discriminatory practices.
  2. Incorporate such new procedures in the internal work regulation approved by Ministry of Labor, collective bargaining agreement and/or internal policies.
  3. As employers are subject to vicarious liability (e.g., if the harassment was committed by the victim’s direct supervisor), organizations should train human resources and supervisory personnel so they can recognize the prohibited conduct and know how to respond to related complaints.
  4. Train human resources personnel to conduct effective investigations and safeguard any evidence that may help the organization defend against a lawsuit.