United States: #Metoo Round 2 - Sweeping Legislation To Transform New York Employment Landscape Yet Again

On June 19 and 20, 2019, New York legislators passed a package of bills, including bills designed to strengthen discrimination and sexual harassment protections in the workplace, to prohibit wage differentials based on protected class status and to ban employers from seeking applicant salary history. Governor Andrew Cuomo has promised to sign the bills once delivered to him. The bills—further aftermath of the #MeToo movement—will build upon the New York State Budget Bill for Fiscal Year 2019 and last year's comprehensive sexual harassment reform, making New York's laws arguably the most robust employee protections in the country.

Enhanced Discrimination and Sexual Harassment Laws

Once signed, Senate Bill S6577 will make a number of changes, including:

Expanding Statutory Coverage

  1. The New York State Human Rights Law (NYSHRL) will govern New York employers of all sizes (effective 180 days after the bill becomes law). Currently, the law governs only employers with four or more employees, except for sexual discrimination provisions, for which all employers are covered.
  2. Domestic workers and independent contractors will be protected from all forms of harassment (effective 60 days after the bill becomes law), as opposed to just sexual harassment, as the law currently provides. This change conforms state law with the Budget Bill's previous amendments and with the New York City Human Rights Law (NYCHRL) standards currently in place.
  3. The new legislation extends the statute of limitations from one year to three years for NYSHRL sexual harassment complaints in filings before the New York State Division of Human Rights, similar to what was put in place for sexual harassment complaints in the Budget Bill (effective one year after the bill becomes law). This brings the state in-line with the NYCHRL statute of limitations, and in-line with what plaintiffs have always been able to do in court. All other discrimination claims will still be subject to the one-year statute of limitations before administrative agencies.

Lowering Standard for Establishing Harassment and Discrimination

  1. The bill eliminates the "severe or pervasive" standard previously used to determine whether harassing conduct arose to the level of discrimination, which is akin to the NYCHRL (effective 60 days after the bill becomes law). Harassment will now be an "unlawful discriminatory practice when it subjects an individual to inferior terms, conditions, or privileges of employment because of the individual's membership in one or more of these protected categories." The bill does provide employers with an affirmative defense when "the harassing conduct does not rise above the level of what a reasonable victim of discrimination with the same protected characteristic would consider petty slights or trivial inconveniences." (Emphasis added.) This substantially conforms state law to the NYCHRL's "less well" standard.
  2. The bill also eliminates the Faragher-Ellerth defense for liability purposes, meaning that the fact that an individual did not make a complaint about discriminatory harassment to an employer, licensing agency, employment agency or labor organization will not be determinative of liability, likewise akin to the rules under the NYCHRL (effective 60 days after the bill becomes law).
  3. The bill eliminates any requirement that employees identify a comparator, or an employee outside of the claimant's protected category, to establish discrimination (effective 60 days after the bill becomes law).
  4. Courts will be required to interpret the NYSHRL liberally, regardless of how comparable federal provisions are construed, as is the case with the NYCHRL (effective immediately after the bill becomes law).

Permitting Additional Damage Recovery, Effective 60 Days After the Bill Becomes Law

  1. Employers will now face the possibility of punitive damages for any NYSHRL claim (same as the NYCHRL).
  2. The prevailing party "shall" be awarded attorneys' fees in all claims of employment discrimination, whereas attorneys' fees are currently discretionary in cases of sexual harassment in employment. A prevailing employer still must show that the employee's action was frivolous.

Restrictions in the Use of Nondisclosure Agreements

  1. The bill bars nondisclosure agreements from prohibiting the disclosure of underlying facts and circumstances to any discrimination, harassment, retaliation or failure to accommodate claim or action unless:

    1. Confidentiality is the complainant's preference;
    2. The complainant is provided with the confidentiality provision in writing in plain English or their primary language;
    3. The complainant has been given 21 days to consider the confidentiality provision, after which, if it is the complainant's preference, such preference must be memorialized in an agreement signed by all parties; and
    4. The complainant is given seven days in which to revoke the agreement (effective 60 days after the bill becomes law).
  2. While the scope of the nondisclosure language is less than clear, employers still may be able to keep terms and conditions of a settlement agreement confidential without providing 21 days' notice and seven days to revoke, so long as the employer makes clear that the nondisclosure provision does not apply to the underlying facts or circumstances that gave rise to the claim, i.e., what wrong or alleged wrong led to the settlement. The lack of clarity on this issue ultimately will need to be resolved by the courts.
  3. If an employment contract contains a nondisclosure agreement, the contract must contain an exception providing that the employee or future employee is not prohibited from speaking with law enforcement, the Equal Employment Opportunity Commission, the state Division on Human Rights, a local commission on human rights or an attorney retained by the employee or potential employee (effective January 1, 2020).

This bill expands the Budget Bill nondisclosure agreement protections and applies them more broadly to protected categories other than sexual harassment.

Eliminating Arbitration, Effective 60 Days After the Bill Becomes Law

The bill will bar mandatory arbitration to resolve any discrimination claims (which likewise now extends the Budget Bill's prohibition to discrimination claims other than those related to sexual harassment).

On June 26, 2019, however, a federal court in Latif v. Morgan Stanley & Co., found the Budget Bill's prohibition on mandatory arbitration of sexual harassment claims to be preempted by the Federal Arbitration Act (FAA). A former associate at Morgan Stanley & Co. LLC sued the company in the Southern District of New York, alleging he was the target of inappropriate comments regarding his sexual orientation, inappropriate touching, sexual advances and offensive comments about his religion. He also alleged a female supervisor sexually assaulted him. At the commencement of his employment with Morgan Stanley, the plaintiff signed an offer letter incorporating by reference Morgan Stanley's arbitration agreement, which required arbitration of, among other things, any statutory discrimination, harassment and retaliation claims. The parties disputed whether the plaintiff's sexual harassment claims were subject to the arbitration agreement in light of the recent Budget Bill's prohibition. The court granted Morgan Stanley's motion to compel arbitration, finding that the Budget Bill's prohibition was inconsistent with the FAA's policy favoring the enforcement of arbitration agreements: "When state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA."

The court's decision in Latif creates the strong presumption that S6577's prohibition on mandatory arbitration for all discrimination claims will be preempted by the FAA as well.

Broadening Scope of Attorney General's Office Powers, Effective Immediately After the Bill Becomes Law

The bill will give the attorney general the power to prosecute and defend employers for civil discrimination claims based on all protected classes. Currently, the attorney general's powers are limited to prosecuting and defending discrimination claims based on age, race, creed, color and national origin.

Sexual Harassment Trainings and Policies, Effective Immediately After the Bill Becomes Law

  1. The bill requires employers to provide employees, at the time of hire and at every annual sexual harassment prevention training, a notice in English and in the employee's primary language containing the employer's sexual harassment prevention policy and the information presented at the training program.
  2. The NYSDHR commissioner will be required to prepare and make available templates of the model sexual harassment prevention trainings and policies. The Budget Bill required the NYSDHR to make available model policies and trainings, but did not require templates of those policies and trainings to be made available.
  3. The NYSDHR and the New York State Executive Department will be required to evaluate and update the model sexual harassment prevention policy and guidance every four years.

The new legislation will require employers to overhaul many of their existing policies, forms, agreements and handbooks. Every New York severance agreement, employment agreement and handbook will require detailed revisions and review. Employers with fewer than four employees and no existing policies will need to create and implement such policies. Additionally, while the amendments do not explicitly address general discrimination training, in light of these changes, employers, if not doing so already, may want to include comprehensive discrimination trainings while conducting the mandatory sexual harassment trainings.

Expansion of Equal Pay Protections

New York's current equal pay law prohibits employers from paying employees differently based on sex when those employees work in the same establishment performing equal work on a job requiring equal skill, effort and responsibility, performed under similar working conditions. Senate Bill S5248B (effective 90 days after the bill becomes law) expands the current law to prohibit such wage differential based on all protected classes, not just based on sex. This amendment grants all protected classes the same level of coverage as gender received under New York's 2016 Achieve Pay Equity Law.

S5248B further adds that work performed does not just have to be equal—work can be "substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions."

The current exceptions to equal pay protections remain in place, allowing wage differentials when payment is made pursuant to a differential based on a seniority system, a merit system, a system that measures earnings by quality or quantity of production or a bona fide factor other than a protected class, such as education, training or experience.

These changes are akin to the recently enacted Diane B. Allen Equal Pay Act, which significantly expanded pay equity protections in New Jersey in April 2018 to cover all protected classes, as opposed to just gender. The Allen Act was one of the first equal pay laws to afford protection to all protected classes, and as New York follows closely behind, it is likely more cities and states across the country will do the same.

Employers may want to scrutinize their pay systems and consider, at a minimum, implementing measures such as conducting pay audits with the aid of counsel to identify existing pay differences based on protected categories and formulate strategies for compliance; analyzing hiring and compensation practices and taking appropriate steps to document decisions affecting compensation based on the recognized justifications for job-related pay differences; reviewing job descriptions and postings to ensure they accurately reflect duties and responsibilities of positions; and updating training of supervisory staff.

Prohibition on Salary History Inquiries

Senate Bill S6549 (effective 180 days after the bill becomes law) prohibits all employers from:

  1. Relying on an applicant's wage or salary history in determining whether to offer employment or in determining the wages or salary for the applicant.
  2. Seeking, requesting or requiring wage or salary history from an applicant or current employee as a condition of interviewing or of continuing to be considered for an offer of employment, or as a condition of employment or promotion.
  3. Seeking, requesting or requiring wage or salary history from sources such as former employers and employees.

The bill also prohibits employers from retaliating against applicants or employees for refusing to provide wage or salary history or for filing a complaint alleging a violation of the bill.

Applicants and employees may, voluntarily and without prompting, disclose or verify wage or salary history for purposes such as negotiating wages or salary. The law does not expressly contain restrictions on how an employer may use salary history information that is voluntarily disclosed. However, the bill does expressly allow employers to confirm wage or salary history only if at the time the employer makes an offer of employment with compensation, the applicant or employee responds to the offer by providing prior wage or salary information to support negotiations.

New York City became the first jurisdiction to pass a salary history inquiry ban in January 2017, and many other jurisdictions—such as California, Delaware, Chicago, Massachusetts, Washington state and more—have since followed suit. Some bans apply only to public employers, while others apply to private employers as well. At least two states, Michigan and Wisconsin, have so-called reverse bans, which prohibit localities in those states from enacting a salary history inquiry ban. Of the states with bans, there are a number of different variables among the laws, including which employers are covered; to whom the laws apply; the geographic scope of the ban; how wages are defined; what constitutes voluntary disclosure; and so forth.

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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