United States: New York State Dramatically Expands Its Discrimination Laws

New York, N.Y. (July 11, 2019) - The New York State legislature has adopted, and it is anticipated that Governor Cuomo will soon sign, new legislation that makes the state one of the most pro-employee states in the country. The dates on which particular legislative provisions take effect are staggered, but many of the most drastic changes take effect within 60 days after the legislation is adopted.

The critical changes to the New York State Human Rights Law include the following:

  1. harassment need no longer be severe or pervasive to create an actionable hostile environment;
  2. attorneys' fees and punitive damages are now recoverable for all discrimination claims;
  3. employers can no longer avoid liability based on an employee's failure to complain about the discriminatory conduct via the employers' discrimination policies and procedures;
  4. the discrimination law applies to all employers regardless of size; and,
  5. the law's protections now apply to non-employees as well as employees.

Additionally, equal pay protections have been adopted and all employers (not just those located in New York City) are now prohibited from asking job seekers about their current compensation.

All told, this is a sea change in the law which will make it more difficult and expensive to defend and resolve discrimination claims and will likely result in many more such cases being litigated in state rather than federal courts.

The Human Rights Law is to Be Liberally Construed

The legislature has echoed the New York City Council in pronouncing that the provisions of the Human Rights Law are to be construed liberally to accomplish the remedial purposes of the statute, regardless of whether the federal civil rights laws have been so construed. Further, exceptions to and exemptions from the law are to be construed narrowly to maximize deterrence. The specific additional changes discussed below further reflect the legislature's clear intent to drastically revamp and expand the available protections.

Establishing a Harassment or Discrimination Claim is Now Easier

Perhaps most notably, it will now be much easier for complainants to prove harassment. Historically, under New York precedent stemming from United States Supreme Court interpretations of Title VII of the Civil Rights Act that date back to the 1980s, alleged victims of such offenses had to prove that the harassing conduct was "severe or pervasive" enough to alter the victim's employment conditions. Effective 60 days from when the governor signs the legislation, claimants no longer need to prove conduct that reaches the "severe or pervasive" standard. Instead, they need only show that the harassment rises above the level of what a reasonable discrimination victim would consider a petty slight or a trivial inconvenience. This is akin to the pro-employee standard long applicable under the New York City Human Rights Law.

As a practical matter, this new standard will mean that it will be much more difficult for employers to obtain dismissals via pre-answer motions to dismiss or motions for summary judgment.

Additionally, the law is being amended to provide that employees claiming to have been discriminated against based on membership in a protected class are not required to identify a comparator co-worker to whom the employee must compare his or her treatment. Many courts had used the comparator analysis as a basis to determine whether the employer conduct complained of might actually be attributable to factors other than the employee's protected characteristics.

The End of the Faragher-Ellerth Affirmative Defense in New York

The so-called Faragher-Ellerth affirmative defense established under federal anti-discrimination law and subsequently adopted in New York at the turn of the 21st century provided employers with a means to dispose of claims if (1) the employer "exercised reasonable care" in taking preventative and corrective actions against harassment and (2) the alleged victim unreasonably failed to take advantage of any such preventative or corrective mechanisms in place to address such conduct. The New York State legislature has now recognized that, in many discrimination and harassment cases, victims feel they cannot submit a complaint or speak out about the offensive conduct without suffering adverse consequences, especially if the victim's supervisor is the party responsible for that conduct. As a result, the law will now provide that a claimant's failure to submit an internal complaint pursuant to the employer's policies and practices does not in and of itself provide a basis for employers to avoid potential liability.

Arbitration Agreements Are Prohibited for Discrimination Claims

As of 2018, mandatory arbitration clauses were prohibited for sexual harassment claims. The new legislation expands this prohibition to include all types of discrimination claims. It remains to be determined whether that provision can be effective to prevent arbitration given its evident conflict with the Federal Arbitration Act, which is pro-arbitration and arguably supersedes this state law. Indeed, only days ago, a respected New York federal district judge ruled that the Federal Arbitration Act preempted the previous version of the New York statute precluding arbitration. See Latif v. Morgan Stanley & Co. LLC, et al., No. 1:18-cv-11528 (S.D.N.Y. June 26, 2019).

Heightened Damages and Remedies for Employment Discrimination

Defending and resolving discrimination claims will become significantly more expensive as a result of the law's provisions regarding punitive damages and attorneys' fees. Now, for the first time, punitive damages can be recovered and attorneys' fees can be awarded for all discrimination claims. Previously, they were available for only sexual harassment claims. This is effective 60 days after the governor signs the legislation. Unlike under federal law, there is no cap on punitive damages.

Employers should not view this as a likely avenue to being able to recover attorneys' fees when they win a discrimination lawsuit: A prevailing defendant can only recover fees if it can prevail on a motion showing that the employee's claim was frivolous.

Non-Disclosure Agreements Are Prohibited for Discrimination Claims

The law now prohibits agreements between employees and employers that prevent disclosure of the underlying facts of any discrimination claim are similarly prohibited, unless the complainant explicitly prefers to include such an agreement in the resolution of a claim. A complainant has 21 days to consider such an agreement from the time it is presented, and has an additional seven days to change his or her mind once the agreement is executed. Additionally, agreements resolving discrimination complaints may not prohibit the employee from cooperating with investigations by government agencies and filing for governmental or insurance benefits. Previously, this restriction applied solely to agreements resolving sexual harassment claims. This amendment is to be effective for agreements entered into on or after January 1, 2020.

Increased Notice Requirements for Sexual Harassment Policies

To complement the state law requirement to host annual mandatory anti-sexual harassment trainings enacted in 2018, employers must now provide employees written notice of the employer's sexual harassment prevention policy and harassment prevention training programs. This notice must be presented to each employee both in English and in the employee's primary language, and must be presented both at the time of hiring and at every annual sexual harassment prevention training.

Administrative Statute of Limitations For Sexual Harassment Claims is now Three Years

The statute of limitations for filing sexual harassment claims has long been three years if the claim is filed in court, and one year if the claim is filed in the New York State Division of Human Rights. Now, claimants alleging sexual harassment have three years to file with the State Division as well.

Even Very Small Employers Are Covered

The State Human Rights Law had applied only to employers with four or more employees. It will now apply to all employers, regardless of size.

Non-Employees Are Covered by the Human Rights Law

In 2018, the Human Rights Law was amended to protect non-employees such as independent contractors, consultants, vendors, subcontractors, and persons providing services pursuant to a contract from workplace sexual harassment. Those non-employees are now protected from all forms of discrimination encompassed by the statute.

Salary History Inquiries Are Barred

The amendments now prohibit employers from inquiring orally or in writing about job applicants' current salaries. This prohibition includes applicants who are already employed but seeking promotions or lateral positions. Employers may also not rely on that information in determining whether to hire or how much to pay the applicant. The law also prohibits retaliation against an applicant who refuses to divulge his or her salary history. The applicant may voluntarily provide this information if the employer has not coerced the disclosure. This provision will take effect on January 6, 2020.

Equal Pay Law Expansion

On July 10, 2019, Governor Cuomo signed the new equal pay law. As a result, effective January 6, 2020, New York State prohibits wage differentials based on protected class status. Employers must now provide equal pay for "substantially similar work" and are prohibited from pay differentials based on a person's membership in a host of protected class or classes, including age, race, sexual orientation, disability, and domestic violence victim status. Pay differentials are allowed if based on a seniority system, a methodology measuring earnings by quantity or quality, or a bona fide reason other than the individual's membership in a protected class. The pay differential must be job-related and due to business necessity, such as geography, education, or experience.

Significantly, the employee's burden of proof is lowered because he or she need not prove that his or her work was equal to the more highly paid comparator. Also of note is that the law permits the recovery of treble damages for violations.

This law is particularly significant as it is broader than the Federal Equal Pay Act, which only protects women who are paid less than male co-workers for comparable positions. Under this law, members of any protected class can seek to prove that their employer discriminates by paying less than is paid to persons not within the protected class. We anticipate that class actions under this statute will become rampant in coming years.

Takeaway

As with all changes in the law, employer awareness and compliance is key. It is recommended that all employers review and revise their policies as necessary and vigorously enforce them via training and manager awareness. Since discrimination claims will now be much more difficult to defend, it behooves all employers to take all available measures to prevent claims to the extent possible by adopting and enforcing strong policies and practices. Additionally, in light of the equal pay protections, employers may be well advised to perform audits of their pay practices to ensure that any lurking inequities are uncovered and addressed.

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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