United States: Budget Bill Imposes Sweeping Requirements On Employers Related To Sexual Harassment

The #MeToo movement is not finished making waves just yet. Governor Cuomo signed a 2019 Budget Bill on April 12, 2018, but the bill did not limit itself to budgetary issues. Instead, it included sweeping revisions to several statutes, resulting in several new requirements for employers doing business in New York State:

Anti-Sexual Harassment Policies and Training

The law mandates that by October 9, 2018, all New York employers enact an anti-sexual harassment policy that meets or exceeds the standards set by a model policy, which will be drafted by the New York State Department of Labor (DOL) and New York State Division of Human Rights (DHR).The model policy, although not yet drafted, will reportedly include: (1) a prohibition against sexual harassment, with examples of what sexual harassment is; (2) information regarding employees' rights and potential redress to adjudicate sexual harassment, including administratively and judicially, and the remedies available to victims of sexual harassment, including references to the federal and state provisions and a statement that there may be applicable local law; (3) a complaint form; (4) a confidential investigation procedure and a commitment to due process for all parties involved; (5) a clear statement that sexual harassment is misconduct and that any employee engaging in such misconduct, and any supervisory or managerial personnel knowingly allowing such misconduct, will be sanctioned; and (6) a clear prohibition against retaliation for those who complain or who assist in any sexual harassment proceeding. Employers should note that the requirement to promise a confidential investigation may conflict with requirements from the Equal Employment Opportunity Commission to conduct a thorough investigation, and directives from the National Labor Relations Board that employers cannot institute a blanket confidentiality provision on workplace investigations. It is unclear how or if the DOL and DHR will remedy this contradiction in the model policy.

The law also mandates that by October 9, 2018, employers provide sexual harassment training, which must be equal to or exceed the standards of a model training program, which will be developed by the DOL and DHR. The model training program, although not yet drafted, will reportedly include: (1) an explanation of what sexual harassment is, including examples of some conduct that would constitute unlawful sexual harassment; (2) information regarding employees' rights and potential redress to adjudicate sexual harassment, including administratively and judicially, and the remedies available to victims of sexual harassment, including references to the federal and state provisions; and (3) an explanation of conduct by supervisors and additional responsibilities of supervisors.

The content of both the policy and the training program will be available on the DOL's and DHR's websites at some point before the laws become effective in October.

Employers Now Responsible for Harassment of Non-Employees

Another piece of the law, effective immediately, makes employers responsible for permitting sexual harassment in the workplace of contractors, subcontractors, vendors and others providing services pursuant to contracts. Employers are liable if they knew or should have known that the sexual harassment was occurring and failed to take appropriate corrective action. This means that if a contractor or vendor of an employer is being sexually harassed by any employee of the employer, the employer may be held liable for its employees' harassing conduct if it knew or should have known about that activity. This is a large departure from the current law, which only holds employers liable to its own employees. This change may necessitate that employers distribute their anti-harassment policies and complaint procedures to all contractors in addition to their employees, in order to reduce risk of liability and preserve any defenses.

Prohibition on Mandatory Arbitration of Sexual Harassment Claims

Effective July 11, 2018, employers are not permitted to institute mandatory arbitration agreements related to sexual harassment claims. What this means is that if an employer currently has a mandatory arbitration clause built into its standard employment agreements, separation agreements or settlement agreements, those documents will need to be edited to carve out an exception for any claims related to sexual harassment. It is unclear how or if the Federal Arbitration Act will preempt this prohibition, but it is possible we will see litigation related to preemption in the coming months.

Limiting Nondisclosure Agreements Related to Sexual Harassment Claims

Effective July 11, 2018, the law will no longer permit nondisclosure provisions in agreements settling or resolving claims involving sexual harassment that would prevent the disclosure of the underlying facts and circumstances, unless the condition of confidentiality is the complainant's preference. To the extent a confidentiality or non-disclosure provision is used, the provision must be provided to all parties with at least 21 days to consider it. If, after the 21 days, the complainant decides to include such terms, an agreement to that effect should be signed by all parties. The complainant then has seven days to revoke his or her agreement to use the provision, and the agreement shall not become effective until that revocation period has expired. The law does not address whether a complainant may waive any portion of the 21-day review period.

Bottom Line

This law imposes several new requirements upon New York State employers, and they should review all existing policies and form agreements to ensure that they comport with the new requirements, some of which are effective immediately, others of which will begin to phase in over the coming months. Employers should also conduct training to ensure that all supervisors and employees understand the new provisions and requirements. As with most state law changes, there are nuances to this new law. BakerHostetler's Employment Group, led by Amy J. Traub, is available to assist with any questions employers may have.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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