United States: Phase Two Of New York Legislative Response To #Metoo: State Passes Comprehensive Anti-Discrimination Expansion Bill

Major changes are in store for New York employers under a new bill passed in the waning hours of the 2019 legislative session. As part of an ongoing, multi-year effort to address sexual harassment and other discrimination and harassment issues, the New York legislature on June 19, 2019 passed Assembly Bill 8421 ("AB 8421"), a compendium bill that introduces new and refined employee protections against harassment, retaliation, and discrimination in the workplace. AB 8421 amends the New York State Human Rights Law ("NYSHRL") to usher in new affirmative protections and procedural mandates that will significantly affect employer liability under state law. Building on protections previously enacted under the 2018 state budget, AB 8421 will expand prohibitions on nondisclosure agreements and arbitration agreements to categories of discrimination and harassment beyond sexual harassment. Key elements of AB 8421 are described below.

New Thresholds and Changes to Employer Defenses:

Among other significant provisions, AB 8421 nixes the familiar "severe or pervasive" standard in harassment litigation. Under the new standard, conduct is unlawful as harassment 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 standard is likely to encompass a greater range of conduct than under the previous standard and closely aligns the New York State anti-harassment law with the New York City standard on sexual and other forms of harassment.

A New York employer may still defend against a claim of sexual or other harassment by establishing that 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." Again, this amendment to the state law is consistent with how the New York City Human Rights Law on harassment has long since been interpreted.

AB 8421 also impacts an employer's potential defense to a harassment claim. Under federal law, the affirmative Faragher-Ellerth defense forecloses employer liability for sexual or other harassment by a supervisor where an employer can demonstrate that it took reasonable care to prevent and correct harassment in the workplace and the employee-claimant unreasonably failed to follow the employer's internal procedures for reporting harassment. Under the new law, the lack of an internal complaint is "not [] determinative" as a defense to a harassment claim under the NYSHRL.

The standards and defenses provisions are set to take effect sixty days after AB 8421 is signed into law.

Further Restrictions on the Use of Nondisclosure Agreements:

In the wake of the #MeToo movement, New York (and other states) have already passed legislation restricting the issue of nondisclosure agreements when resolving sexual harassment claims. With the passage of AB 8421, New York will now prohibit nondisclosure terms in settlement agreements related to the "underlying facts and circumstances" of any discrimination claim – not just a sexual harassment claim – arising under the NYSHRL. The law continues to allow nondisclosure terms at the employee's choosing. For a nondisclosure provision to be enforceable, however, the provision must not attempt to prevent the employee from engaging with a government agency or a benefits provider in an investigation. A valid nondisclosure provision must also, as of January 1, 2020, contain language clarifying that that the nondisclosure clause does not prevent the employee from communicating with the EEOC, law enforcement, the New York State Division of Human Rights, a local human rights commission, or the employee's own attorney about "factual information related to any future claim of discrimination."

Under AB 8421, an employee has a statutorily-guaranteed twenty-one days in which to consider a settlement agreement containing a nondisclosure provision under the NYSHRL. After the twenty-one days have elapsed, an employee has an additional seven days to revoke consent to the agreement. As with the earlier iteration of the New York law on nondisclosure provisions, the text of the amended statute does not extend to a nondisclosure clause that keeps confidential only the settlement amount. AB 8421's nondisclosure provisions will take effect sixty days after the enactment of the law.

Mandatory Arbitration Prohibited:

A 2018 law purported to prevent the use of mandatory arbitration clauses with respect to sexual harassment claims. AB 8421 expands that prohibition to include mandatory arbitration agreements regarding any form of discrimination under the New York State Human Rights Law. Nevertheless, the preemption argument – namely that the Federal Arbitration Act preempts state law when it applies – should still dramatically limit the impact of AB 8421 to only those arbitration agreements governed by state law. The mandatory arbitration prohibition will take effect sixty days after the enactment of AB 8421.

Enhanced Remedies:

AB 8421 also expands remedies for workplace harassment, retaliation, and discrimination. For the first time, New York employers face punitive damages for any NYSHRL harassment, retaliation, and discrimination claim. Additionally, AB 8421 mandates that attorneys' fees be awarded to successful plaintiffs. As under the existing law, to recover attorneys' fees in connection with defending against a claim under the NYSHRL, an employer "must make a motion requesting such fees and show that the action or proceeding brought was frivolous." AB 8421's enhanced remedies provisions will take effect sixty days after the bill is signed into law.

New Employee Notice Requirements:

AB 8421 requires all New York employers to provide employees with a notice detailing the employer's sexual harassment prevention policy at the time of hire, and annually thereafter at the employer's sexual harassment training. This notice must also contain the "information presented at such employer's sexual harassment prevention training program," although it is unclear how that differs from the policy information required to be in the notice

Employees are generally entitled under AB 8421 to receive the notice containing an employer's sexual harassment prevention policy and sexual harassment prevention training program in the employees' primary language. An employer need only provide such notice in an employee's primary language, however, if the Commissioner has published model templates in that language. An employee may otherwise receive the notice in English for compliance purposes under AB 8421.

The new notice requirement has immediate effect following enactment of AB 8421.

The above changes apply to all employers in the state, irrespective of size. Additionally, both employees and contractors are covered under the latest expansion of the NYSHRL. As for procedural updates, AB 8421 lengthens the limitations period for filing sexual harassment claims under the NYSHRL with the New York State Division of Human Rights to three years beginning one year following the enactment of the law.

Awaiting the Governor's Signature :

AB 8421 now goes to the desk of New York Governor Andrew Cuomo, who championed and has promised to sign the legislation. While we wait for the final word from the Governor, New York employers should anticipate these changes will become the latest additions to the ever-changing patchwork of employment legislation since the #MeToo movement first broke some 18 months ago.

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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