New legislation expands sexual harassment laws, adds policy and training obligations and bars mandatory arbitration of sexual harassment claims for New York employers

April 15, 2018

Employment Law Alert

Author(s): Tara E. Daub

On April 12, 2018, New York Governor Andrew Cuomo signed the FY 2019 Executive Budget into law, which includes new legislation expanding employees’ and even some non-employees’ protections against sexual harassment in the workplace. According to Governor Cuomo’s recent remarks, these new laws are “[t]he nation’s most aggressive anti-sexual harassment agenda.”

In sum, the new legislation imposes various requirements on employers, including: (1) requiring employers to establish a sexual harassment prevention policy and conduct annual sexual harassment training meeting minimum standards, (2) expanding the New York State Human Rights Law (NYSHRL) to prohibit sexual harassment of certain non-employees in the employer’s workplace, (3) limiting the use of nondisclosure agreements during settlements of sexual harassment claims and imposing consent procedures necessary for a valid agreement and (4) barring enforcement of almost all mandatory arbitration clauses for sexual harassment claims, among other things. This alert summarizes the most significant aspects of this new legislation and how New York employers should prepare to comply with these new laws.

Mandatory anti-sexual harassment policy and annual training

The Executive Budget adds a provision to the New York Labor Law that requires all employers to establish and provide to all employees a written sexual harassment prevention policy that equals or exceeds minimum standards, consistent with a model policy to be created by the New York Department of Labor (DOL) in consultation with the New York Division of Human Rights (DHR). Whether employers use the model policy published by the DOL and DHR or create their own policy, the sexual harassment prevention policy must include certain criteria, such as a strict prohibition against sexual harassment, examples of prohibited conduct, information concerning the statutory provisions prohibiting sexual harassment, a standard complaint form, the employer’s complaint procedure, information regarding employees’ rights of redress, all available administrative and judicial forums in which to raise sexual harassment claims and other items. The DOL and DHR will create and publish a model sexual harassment prevention guidance document, which presumably will discuss the model policy and the minimum standards required for employer-developed policies.

The new legislation also requires all employers to provide sexual harassment prevention training to all employees on an annual basis, which equals or exceeds minimum standards. Again, the DOL, in consultation with the DHR, will develop a model sexual harassment prevention training program that employers may use to comply with this law. Employers may use their own training program in lieu of the DOL’s model, so long as it is consistent with the minimum standards in the DOL’s model program, including certain content, such as an explanation of what constitutes “sexual harassment,” with examples, information regarding the statutory provisions concerning sexual harassment, remedies available and information regarding employees’ rights of redress and all available forums for adjudicating sexual harassment complaints. As for the format of the training, the law states that the training must be “interactive,” but does not state whether the training must be live—in a focused meeting that also allows for interactive questions and answers—or whether pre-recorded training or computer training modules may be sufficient. The legislation also authorizes the Commissioner of Labor to promulgate regulations as necessary to carry out the policy and training provisions. These policy and training requirements will go into effect on October 9, 2018.

At this time, it is unclear when the DOL and DHR will publish regulations associated with this law, if at all, or post the model training materials and model sexual harassment policy on their websites. It also remains to be seen what the specific content and quality of the model policy and training materials will look like. Between now and the effective date of the law, employers should examine their current harassment policies and training materials and be prepared to revise them to ensure compliance with the requirements of the new legislation. We will provide further information and options as the DOL and DHR develop their guidance and models.

Expansion of anti-sexual harassment laws to non-employees

The Executive Budget also includes legislation expanding the NYSHRL to prohibit employers from “permit[ing]” sexual harassment against certain non-employees “in its workplace.” The term “non-employees” is not limitless, but includes a “contractor, subcontractor, vendor, consultant or other person providing services pursuant to a contract in the workplace or who is an employee of such contractor, subcontractor, vendor, consultant or other person providing services pursuant to a contract in the workplace.”

Employers may be liable under this new law if they knew or should have known that one of the above-referenced “non-employees” was subjected to sexual harassment in the employer’s workplace and failed to take “immediate and appropriate corrective action.” Absent from the law, however, are definitions for the terms “sexual harassment” and “employer’s workplace.” Nor does the law specifically describe what “immediate and appropriate corrective action” in response to a claim of sexual harassment from a non-employee would be sufficient to avoid liability. However, the extent of the employer’s control and any other legal responsibility that the employer may have with respect to the conduct of the harasser “shall be considered.”

This law is effective immediately. As a result, employers should ensure that their existing policies and practices for prohibiting employees from engaging in harassment toward employees also extend to prohibiting harassment toward the categories of non-employees enumerated by the statute.

The potential impact of this law is significant. Historically, the NYSHRL—and other laws prohibiting sexual harassment in the workplace—typically apply only to employees. This new law, however, expands the provisions of the NYSHRL to individuals who may enter “the employer’s workplace” but have little more than a tenuous relationship with an employer. According to Governor Cuomo’s recent comments regarding the Executive Budget, the purpose of this new law is to extend the NYSHRL because, “[m]any people are no longer employees. They’re independent contractors, they’re freelancers, etcetera.”

Limitations on nondisclosure agreements

Another provision of the Executive Budget amends the General Obligations Law to add a provision limiting employers’ ability to include certain confidentiality provisions in settlement agreements or other agreements resolving sexual harassment claims. Specifically, the new law prohibits employers from including provisions in settlement agreements involving sexual harassment claims that would prevent the complainant from disclosing the underlying facts and circumstances to the claim or action unless the complainant prefers that such a provision be in place.

If the complainant prefers to keep the underlying details of the sexual harassment confidential, the legislation establishes a procedure for memorializing this preference in the written agreement, which bears a close resemblance to the notice and consent requirements of the federal Older Workers Benefit Protection Act for obtaining a valid release of claims under the Age Discrimination in Employment Act. Specifically, the complainant must have 21 days to consider such a confidentiality provision and the parties must sign an agreement memorializing the complainant’s preference to keep the details of the underlying facts and circumstances of the sexual harassment claim confidential. In addition, the complainant must receive at least seven days following the execution of the agreement to revoke the agreement.

These restrictions do not appear to apply to the amount of the settlement or other terms of the settlement agreement. In other words, the plain language of the legislation extends only to a non-disclosure provision that would “prevent the complainant from disclosing the underlying facts and circumstances to the claim or action.” This legislation goes into effect on July 11, 2018.

On a going forward basis, employers should be mindful of these requirements when negotiating and resolving any claims involving sexual harassment. However, the statute itself does not define “sexual harassment,” which could create some ambiguity. Employers should consult with counsel whenever resolving sexual harassment claims, in litigation or otherwise, to ensure that the requirements of this legislation are satisfied, as new language may need to be added to settlement agreements, separation agreements and similar agreements.

Prohibition on mandatory arbitration clauses

Mandatory arbitration clauses for sexual harassment claims are now largely prohibited. The Executive Budget amends the Civil Practice Law and Rules (CPLR) to add a new Section 7515, which renders such “prohibited clauses” null and void. However, the law expressly provides that an employer’s inclusion of a “prohibited clause” extending to sexual harassment claims does not impair the enforceability of any other provision of the contract.

Notably, however, for union employers, the terms of the collective bargaining agreement will be controlling. Under current law, consistent with the Supreme Court’s decision in 14 Penn Plaza L.L.C. v. Pyett, 556 U.S. 247 (2009), a collective bargaining agreement (CBA) may contain enforceable language mandating arbitration of certain statutory claims by union members if the CBA’s language “clearly and unmistakably” requires the employee to resolve the specific statutory claim by arbitration in lieu of a judicial remedy. Courts in the Second Circuit have held that the holding and requirements of the 14 Penn Plaza case apply to Title VII and NYSHRL claims. While such collective bargaining agreements are not the norm, the new amendment to the CPLR would not affect the enforceability of such otherwise valid agreements to mandate arbitration of sexual harassment claims.

This law goes into effect on July 11, 2018. Employers should consult with counsel regarding the enforceability of mandatory arbitration agreements which currently extend to sexual harassment claims. In light of this change, employers may also wish to consult with counsel regarding the pros and cons of mandatory arbitration programs and consider potential modifications to existing programs.

State employees and contractors

This new legislation also requires state or public employees who are found to be personally liable for intentional wrongdoing related to a sexual harassment claim to reimburse the state agency or entity that makes payment to a plaintiff for such claim for his or her proportionate share of such judgment within 90 days of the payment. As for state contractors, a new law requires bids submitted to the state or any agency or department of the state to contain a specific statement certifying that the bidder has implemented a written policy addressing sexual harassment prevention in the workplace and provides annual sexual harassment prevention training to all of its employees.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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