Tag: Sexual Harassment

Federal Court Declares That a Ban on Mandatory Arbitration of Sexual Harassment Claims Is Inconsistent with Federal Law

Launched more than a decade ago, the #MeToo movement made its way into the national (and international) conversation in 2017, and, by 2018, the movement had such momentum that it spurred a cornucopia of new state laws.  One of these new laws, which became effective July 11, 2018, is a New York State statute that prohibits employers from requiring employees to submit sexual harassment claims to mandatory arbitration.  This new law is codified in Section 7515 of the Civil Practice Law & Rules of the State of New York (“C.P.L.R.”), entitled “Mandatory arbitration clauses; prohibited.”  Section 7515 reflects the New York State Legislature’s (which consists of the New York State Assembly and the New York State Senate) determination that employees should be allowed to have their sexual harassment claims adjudicated in a court of law, if that is their preference.  The introductory clause of Section 7515 also indicates, however, that legislators understood that an unqualified prohibition of mandatory arbitration might not pass muster under federal law:

Prohibition. Except where inconsistent with federal law, no written contract, entered into on or after the effective date of this section shall contain a prohibited clause as defined in paragraph two of subdivision (a) of this section.  (C.P.L.R. § 7515(b)(i).)

Hence, the statute engendered substantial uncertainty among employers.  Now, almost one year after C.P.L.R. § 7515 became law, a U.S. District Court Judge, the Hon. Denise Cote of the Southern District of New York, has addressed this confusion by opining on whether New York State may outlaw privately negotiated agreements to submit all disputes, inclusive of claims for sexual harassment, to arbitration.  In Latif v. Morgan Stanley & Co. LLC, et al., No. 1:18-cv-11528 (S.D.N.Y. June 26, 2019),  Judge Cote delivered a clear message about the collision of C.P.L.R. § 7515, which operates to constrain parties’ rights to agree to arbitrate claims, and the Federal Arbitration Act (the “FAA”), which, as repeatedly reinforced by the U.S. Supreme Court in recent years, mandates substantial deference to private arbitration agreements.  Employers, especially those in the financial services industry, have reason to cheer Judge Cote’s opinion in Latif, which restores a degree of certainty about whether a mandatory arbitration clause governing an employment relationship may still be enforced—at least in some courts.

The essential facts are as follows: Mahmoud Latif (“Latif”) signed an employment agreement (the “Offer Letter”) that incorporated by reference Morgan Stanley’s mandatory arbitration program.  Read together, these documents formed the “Arbitration Agreement” between Latif and Morgan Stanley.  The Arbitration Agreement provided that any “covered claim” that arose between Latif and Morgan Stanley would be resolved by final and binding arbitration, and that “covered claims” included, among other causes of action, discrimination and harassment claims.  Nevertheless, Latif commenced an action against Morgan Stanley in federal court, asserting, among other charges, claims of sexual harassment under federal, state and municipal law.  The Morgan Stanley defendants moved to compel arbitration of the entire case, inclusive of the sexual harassment claims.  Latif opposed that motion on the basis of C.P.L.R. §7515, which, according to Latif, expressed New York State’s “general intent to protect victims of sexual harassment,” and required the Court to retain jurisdiction over the sexual harassment claims—even though those claims fell clearly within the ambit of the Arbitration Agreement.

In granting Morgan Stanley’s motion to compel arbitration, inclusive of the sexual harassment claims, Judge Cote held that C.P.L.R. §7515 could not serve as the basis to invalidate the Arbitration Agreement.  The Court’s rationale is straightforward: C.P.L.R. §7515 purports to nullify agreements to arbitrate sexual harassment claims “except where inconsistent with federal law,” and the statute is indeed inconsistent with the FAA’s “strong presumption that arbitration agreements are enforceable.”  Judge Cote therefore stayed Latif’s court action pending the outcome of arbitration proceedings.

In light of the foregoing, to maximize the likelihood of full enforcement of an arbitration agreement, inclusive of claims for sexual harassment, employers should promptly consider the prospect of removal of a New York State court action to federal court, if circumstances otherwise permit such removal.

Finally, employers also should note that, on June 19, 2019, the New York State Legislature voted to amend Section 7515 to prohibit not only the mandatory arbitration of sexual harassment claims, but also the mandatory arbitration of anyallegation or claim of discrimination.  While, as of this writing, the amendment has not yet been signed into law by the executive, it appears safe to predict that states will continue, in the near future, to attempt to prohibit or constrain mandatory arbitration of discrimination/harassment claims in a way that generates apparent conflict with federal law.  The Supreme Court’s adjudication of a constitutional challenge to C.P.L.R. §7515, and/or like statutes, under the Supremacy Clause of the U.S. Constitution seems to be a likely end-game.

 

©2019 Epstein Becker & Green, P.C. All rights reserved.
Read more on Arbitration and #MeToo on our arbitration type of law page.

New York State Legislature Enacts Sweeping Changes to Combat Sexual Harassment

On June 19th, the New York State Senate and Assembly voted to pass omnibus legislation greatly strengthening protections against sexual harassment. While the bill, SB 6577, is still waiting for the Governor’s signature, Governor Cuomo supported the legislation and plans to sign the bill when it is sent to his desk. The legislation is the product of two legislative hearings that took place early this year, inspired by a group of former legislative staffers who have said they were victims of harassment while working in Albany, NY. The bill includes several provisions directly affecting private employers. These provisions include:

  1. The New York State Human Rights Law (“NYSHRL”) will expand the definition of an “employer” to include all employers in the State, including the State and its political subdivisions, regardless of size. Additionally, the definition of “private employer” will be amended to include any person, company, corporation, or labor organization except the State or any subdivision or agency thereof.
  2. Protections for certain groups in the workplace will also be expanded. While non-employees, such as independent contractors, vendors, and consultants, were previously protected from sexual harassment in an employer’s workplace, they will now be protected from all forms of unlawful discrimination where the employer knew or should have known the non-employee was subjected to unlawful discrimination in the workplace and failed to take immediate and appropriate corrective action. Similarly, harassment of domestic workers will now be prohibited with respect to all protected classes and will be governed under the harassment standard outlined in (3), below.
  3. The burden of proof for harassment claims will be greatly lowered. Any harassment based on a protected class, or for participating in protected activity, will be unlawful “regardless of whether such harassment would be considered severe or pervasive under precedent applied to harassment claims.” Unlawful harassment will include any activity that “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.” Also, employees will no longer need to provide comparator evidence to prove a harassment, and, presumably, discrimination claim.
  4. The law will also alter the affirmative defenses available to employers accused of harassment. The Faragher/Ellerth defense, which allowed employers to avoid liability where the employee did not make a workplace complaint, will no longer be available for harassment claims under NYSHRL. However, an affirmative defense will be available where the harassment complained of “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.”
  5. The statute of limitations to file a sexual harassment complaint with the New York State Division of Human Rights (the “Division”) will be lengthened from one year to three years.
  6. The amendments specify that they are to be construed liberally for remedial purposes, regardless of how federal laws have been construed.
  7. Courts and the Division will be required to award attorneys’ fees to all prevailing claimants or plaintiffs for employment discrimination claims and may award punitive damages in employment discrimination cases against private employers. Attorneys’ fees will only be available to a prevailing respondent or defendant if the claims brought against them were frivolous.
  8. Mandatory arbitration clauses will be prohibited for all discrimination claims.
  9. The use of non-disclosure agreements will be severely restricted. Non-disclosure agreements will be prohibited in any settlement for a claim of discrimination, unless: (1) it’s the complainant’s preference; (2) the agreement is provided in plain English and, if applicable, in the complainant’s primary language; (3) the complainant is given 21 days to consider the agreement; (4) if after 21 days, the complainant still prefers to enter into the agreement, such preference must be memorialized in an agreement signed by all parties; and (5) the complainant must be given seven days after execution of such agreement to revoke the agreement. The same rules apply to non-disclosure agreements within any judgment, stipulation, decree, or agreement of discontinuance. Any term or condition in a non-disclosure agreement is void if it prohibits the complainant from initiating or participating in an agency investigation or disclosing facts necessary to receive public benefits. Non-disclosure clauses in employment agreements are void as to future discrimination claims unless the clause notifies the employee that they are not prohibited from disclosure to law enforcement, the EEOC, the Division, any local commission on human rights, or their attorney. All terms and conditions in a non-disclosure agreement must be provided in writing to all parties, in plain English and, if applicable, the primary language of the complainant.
  10. Employers will be required to provide employees with their sexual harassment policies and sexual harassment training materials, in English and in each employee’s primary language, both at the time of hire and during each annual sexual harassment prevention training. Additionally, the Department of Labor and the Division will evaluate the impact of their model sexual harassment prevention policy and training materials every four years starting in 2022 and will update the model materials as needed.

The majority of these changes will take effect 60 days after the legislation is enacted, with the exception of the “employer” definition expansion, which will take effect after 180 days, and the extended statute of limitations, which will take effect after 1 year. In light of these changes, New York employers should alter their practices and policies to conform with these new requirements. We are monitoring this legislation and will provide updates as new information becomes available.

 

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.
Written by Sean J. Kirby and Danielle Thompson of Sheppard, Mullin, Richter & Hampton LLP.
*Myles Moran, a Sumer Associate in the New York office, assisted with the drafting of this blog.
For more on employment law, see the National Law Review page on Labor & Employment.

 

 

#MeToo-Inspired Laws Hit the Midwest: Illinois Passes Anti-harassment, Pay Equity, and Board Diversity Legislation

After ending 2018 with a slew of new employment laws, Illinois continues to enact legislation impacting employers. Following the example set by California, Washington, and other states recently, the Illinois legislature passed four new bills targeting equity, transparency, and discrimination last week, and Governor J. B. Pritzker is expected to sign them into law. This gives Illinois companies the opportunity to reevaluate their policies and practices with regard to sexual harassment, equity, and discrimination.

Illinois State Law Changes

  • Sexual Harassment (Senate Bill 75)

As the #MeToo movement continues to be a top priority of state legislatures throughout the country, Illinois joins several other states, such as Arizona, California, Delaware, Oregon, Louisiana, Maine, Maryland, New Jersey, New York, Tennessee, Vermont, and Washington, in passing proactive legislation on the topic. SB 75 contains several provisions designed to prevent harassment and discrimination in the workplace.

First, the law limits unilateral nondisclosure agreements and mandatory arbitration agreements relating to sexual harassment and employment discrimination claims. It remains to be seen whether, upon challenge, courts will find this law and others like it that prohibit arbitration agreements to be preempted by the Federal Arbitration Act.

The legislation also requires employers to disclose to the Illinois Department of Human Rights (IDHR) by July 1, 2020, and each July 1 thereafter, the total number of final adverse administrative rulings or judgments in the preceding year and whether any equitable relief was ordered. In addition, SB 75 requires employers to disclose to the IDHR during an investigation the total number of settlements entered into during the preceding five years that relate to any act of alleged sexual harassment or unlawful discrimination. However, the law prohibits the IDHR from relying on the existence of any settlement to support a finding of substantial evidence.

SB 75 also permits employees who are victims of gender-based violence to take unpaid leave and requires hotels and casinos to provide employees working in isolated spaces with panic buttons to prevent sexual harassment or assault.

Finally, under this law Illinois joins California, New York, Delaware, Connecticut, and Maine in requiring employers to hold annual sexual harassment training for all employees. Like New York’s law, SB 75 calls for the IDHR to produce a model sexual harassment training program, including a program specifically tailored to the restaurant and bar industry.

  • Equal Pay Act (House Bill 834)

HB 834, like recent legislation in Colorado, Washington, and Maine, prohibits employers from screening prospective employees based on salary histories and bars employers from requesting or requiring prospective employees to provide their salary history as a condition of being considered for employment. Importantly, the law expressly states that it does not apply to current employees applying for promotions or transfers with the same employer. The law also expressly permits discussions about an applicant’s expectations with respect to compensation and benefits.

HB 834 would ban employers from requiring employees to sign a contract or waiver that would forbid the employee from discussing compensation information (though human resources employees and supervisors may be prohibited from disclosing compensation information learned in their jobs).

This legislation amends Illinois’s Equal Pay Act of 2003. The law previously prohibited discrimination in pay among jobs that require “equal” skill, effort, and responsibility, but the new law will require employers to compare jobs that require “substantially similar” skill, effort, and responsibility. It also now requires that any factor that accounts for a pay differential must not be “based on or derived from a differential in compensation based on sex or another protected characteristic,” must be job related and consistent with business necessity, and must account for the entire differential. Employers that violate the law may be subject to compensatory or punitive damages. These changes to the Illinois Equal Pay Act may, therefore, call for a fresh look at an employer’s pay equity analysis.

  • Lower Threshold for “Employer” under the Illinois Human Rights Act (House Bill 252)

HB 252 amends the Illinois Human Rights Act (IHRA) and provides that “employer” includes any person employing one or more employees within Illinois during 20 or more calendar weeks within the calendar year of or preceding the alleged violation. This significantly expands the previous definition of employer, which included any person employing 15 or more employees in Illinois (matching Federal Title VII’s requirements).

  • Disclosure of Board Demographics (House Bill 3394)

HB 3394 requires publicly traded companies based in Illinois to report the demographics of their board and executives, including the self-identified gender and race of each member of its board. The University of Illinois will then publish an annual report card on Illinois companies’ diversity. Companies will also need to report on their policies and practices for promoting diversity. A previous version of the bill would have required companies to include at least one woman, one African-American, and one Latino on their boards, but these requirements were removed from the bill before it was passed by the state legislature.

Practical Takeaways for Employers

Employers should be acutely aware of how these legislative changes affect their workplaces. To prepare for the implementation of the laws above, employers doing business in Illinois may consider doing the following:

  • Ensuring their sexual harassment and discrimination policies comply with the requirements outlined in SB 75
  • Adopting annual sexual harassment trainings that cover the standards set forth in Illinois law and federal law and preparing for such trainings
  • For employers with under 15 employees that were previously not covered by the IHRA, reevaluating policies to ensure they are in compliance
  • Limiting the use of arbitration or nondisclosure agreements with respect to harassment claims where necessary, and revising all employment agreements to ensure their nondisclosure and arbitration clauses meet the standards set forth in SB 75
  • Adjusting hiring or recruitment processes to eliminate questions about salary history as required by HB 834
  • Conducting privileged pay equity audits to evaluate compliance with the amended Illinois Equal Pay Act

Although #MeToo has not changed the fundamentals of federal discrimination law, the cultural shift continues to place new obligations on employers.

© 2019, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
This post was written by Kayla A. McCann and Sarah J. Platt at Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
More on Employment & Pay Equality on the National Law Review Labor & Employment page.

Trend to Watch: State Legislatures Target Restaurants for Mandatory Sexual Harassment Training

In the New Year, two states – New Jersey and Illinois – have proposed legislation requiring restaurants to adopt a sexual harassment training policy and provide anti-sexual harassment training to employees.  While it remains to be seen whether these bills will become law, attempts to target and reform working conditions in the hospitality industry are nonetheless noteworthy, particularly given that unlike New York and California, neither New Jersey nor Illinois have enacted broad legislation requiring private sector employers, regardless of occupation, to provide sexual harassment training to staff.

New Jersey Bill (A4831)

New Jersey Bill A4831 requires restaurants that employ 15 or more employees to provide sexual harassment training to new employees within 90 days of employment and every five years thereafter.  This training requirement would go into effect within 90 days of the law’s effective date.

As to the content of the training, the bill specifies that supervisors and supervisees receive tailored content relevant to their positions/roles that include topics “specific to the restaurant industry” in an “interactive” format, including practical examples and instruction on filing a sexual harassment complaint.  Implicitly recognizing the diverse nature of the hospitality workforce, the bill requires that such training must be offered in English and Spanish.

The bill would also require restaurants to adopt and distribute sexual harassment policies to employees (either as part of an employee handbook or as a standalone policy), though it does not prescribe the contents of such policies.

While the bill cautions that compliance with the act would not “insulate the employer from liability for sexual harassment of any current or former employee,” strict compliance is advisable as the bill creates fines for non-compliance – i.e., up to $500 for the first violation and $1,000 for each subsequent violation.

Illinois Bill 3351

Illinois Bill 3351, the proposed Restaurant Anti-Harassment Act, is broader than the proposed New Jersey legislation in that it applies to all restaurants regardless of the number of employees on staff.  Like its New Jersey analogue, this bill requires restaurants to adopt a sexual harassment policy and provide training to all employees.

The sexual harassment policy must contain the following elements:

(1) a prohibition on sexual harassment;

(2) the definition of sexual harassment under Illinois and federal law;

(3) examples of prohibited conduct that would constitute unlawful sexual harassment;

(4) the internal complaint process of the employer available to the employee;

(5) the legal remedies and complaint process through the Illinois Department of Human Rights;

(6) a prohibition on retaliation for reporting sexual harassment allegations; and

(7) a requirement that all employees participate in sexual harassment training.

Like New Jersey’s bill, the Illinois bill requires separate training for employees and for supervisors/managers, and delineates the topics to be covered in each training.  Specifically, the employee training must include: (i) the definition of sexual harassment and its various forms; (ii) an explanation of the harmful impact sexual harassment can have on victims, businesses, and those who harass; (iii) how to recognize conduct that is appropriate, and that is not appropriate, for work; (iv) when and how to report sexual harassment.   The supervisor training must include the aforementioned topics in addition to: (i) an explanation of employer and manager liability for reporting and addressing sexual harassment, (ii) instruction on how to create a harassment-free culture in the workplace, and an (iii) explanation of how to investigate sexual harassment claims in the workplace.  In addition to these requirements, the training programs must be offered in English and Spanish, be specific to the restaurant or hospitality industry and include restaurant or hospitality related activities, images, or videos, and be “created and guided by an instructional design model and processes that follow generally accepted practices of the training and education industry.”

If enacted, employees would need to receive training within 90 days after the effective date of the act or within 30 days of employment and every 2 years thereafter.

Like New Jersey, the Illinois bill contemplates a $500 fine for the first violation and a $1,000 fine for each subsequent violation.

Recommendation

Restaurants should carefully track the progress of these bills and be on the lookout for similar legislative efforts in other states.  Given that a number of states, including New York and California, already require all private employers (of a particular size) to provide sexual harassment training, restaurants operating in Illinois and New Jersey may want to move towards implementing a sexual harassment policy and training program sooner than later.

 

©2019 Epstein Becker & Green, P.C. All rights reserved.

Sex Education for Minors?

As we previously reported, this past fall, Governor Jerry Brown signed into law AB 2338, which includes a provision requiring minors 14-17 years of age and their parents/guardians to receive sexual harassment prevention training prior to the issuance of an entertainment work permit by the California Labor Commissioner.  Earlier this week, the Department of Labor Standards Enforcement (“DLSE”) published its guidance regarding AB 2338 on its website.  The DLSE’s very brief guidance does answer some questions regarding the new law, yet leaves some unanswered.

First, the DLSE’s guidance notes that applicants for 10-day temporary entertainment work permits are exempt from the training requirement.

Second, it provides two options for 13-year-old minors who will reach their 14th birthday during the period of a six-month entertainment work permit: (1) apply for a permit which will expire on the minor’s 14th birthday; or (2) the Labor Commissioner will issue permits to minors at least 13 years and six months of age, who provide satisfactory proof of sexual harassment prevention training as an age-eligible minor.

Third, the DLSE’s guidance specifies that the sexual harassment prevention training must at a minimum include the components specified in the Department of Fair Employment and Housing’s form, DFEH Form 185.  This form includes general information regarding sexual harassment as well as employers’ responsibilities related to sexual harassment. The training must be administered by a third-party vendor and may be provided electronically or on site, in a language the participants understand.

Although AB 2338 went into effect on January 1, 2019, the DLSE has stated that, due to the “unavailability of third-party vendors and applicable materials at this time,” the Labor Commissioner will not enforce the new law until June 30, 2019.  Even following the DLSE’s guidance, questions remain regarding the new law, such as the required length of the trainings and which vendors will be deemed acceptable.  MSK will continue to monitor this area and will provide an update via its blog upon any further developments.

 

© 2019 Mitchell Silberberg & Knupp LLP.

Addressing Workplace Sexual Harassment in the Wake of #MeToo

Revelations of the Harvey Weinstein scandal, and those that have followed, have ignited sexual harassment complaints against employers across all industries. Recent news more than confirms that the issue of sexual harassment is not limited to Hollywood. As U.S. Equal Employment Opportunity Commission (“EEOC”) Acting Chair Victoria Lipnic recently said in an interview with Law360, “We see this everywhere. This happens to women in workplaces all over the place.”

With the outpouring of support for victims of sexual harassment, the creation of the #MeToo movement in the last quarter of 2017, and Time magazine’s “Silence Breaker” person of the year, it is clear that this is an issue that employers will need to proactively address in 2018. A study by theBoardlist and Qualtrics, based on a survey conducted this summer, reported that 77 percent of corporate boards “had not discussed accusations of sexually inappropriate behavior and/or sexism in the workplace.” Less than 20 percent of the 400+ people surveyed had reevaluated their company’s risks regarding sexual harassment or sexist behavior, even in light of the recent revelations in the media. Plainly, those numbers are expected to, and no doubt will, increase in the coming year.

Failure to take affirmative steps to prevent harassing behavior and adequately respond to allegations of sexual harassment can have serious consequences. While sexual harassment claims may originate as internal complaints, which must be promptly addressed, they may also result in a discrimination charge filed with the EEOC or the corresponding state or local agency. Since fiscal year 2010, roughly 30 percent of the approximately 90,000 charges of discrimination received by the EEOC each year have alleged sex-based discrimination, and the number of charges alleging sex-based harassment has gradually increased from just below 13 percent to just above 14 percent. Next year, this number is expected to increase because employees are becoming more comfortable reporting and publicizing incidences of sexual harassment in light of recent news, and due to the EEOC’s digital upgrade that allows employees to file EEOC complaints online.

Sexual harassment claims may also lead to litigation, which can be expensive and time-consuming and can create negative publicity. For instance, Mr. Weinstein’s former company, The Weinstein Co. (“TWC”), has been named in a $5 million civil suit alleging that executives of the company did nothing to protect women who did business with Mr. Weinstein, despite being aware of his inappropriate behavior. On December 6, 2017, TWC was one of the named defendants in a proposed class-action racketeering lawsuit alleging that TWC helped facilitate Mr. Weinstein’s organized pattern of predatory behavior. Additionally, the New York attorney general’s office is investigating TWC for potential civil rights violations in its handling of claims of sexual harassment.

There may also be unseen consequences of sexual harassment on the makeup of a workforce. Various studies have reported that harassment may lead to the departure of women from the workforce or the transition into lower-paying jobs. Further, women in jobs with a higher risk of sexual harassment often earn a premium over employees in positions with a lower risk of sexual harassment. Sexual harassment, therefore, may have real impact on compensation and implicate the pay gap and pay equity.

For these reasons, many employers are looking to implement and also supplement sexual harassment training seminars provided for their employees in order to combat sexual harassment in the workplace.

Employers should also consider whether their current practices include the following:

  • A robust complaint procedure. Sexual harassment at work often goes unreported. According to the EEOC, as many as three-quarters of harassment victims do not file workplace complaints against their alleged harassers. Make sure that you have reporting mechanisms in place to receive complaints and consider allowing employees to complain directly to human resources, to a supervisor, or to an anonymous hotline.
  • A prompt investigation of complaints. Upon receiving a complaint, promptly and thoroughly investigate the allegations, and make sure that your employees do not retaliate against the alleged victim or any person who cooperates in the investigation.
  • Independent investigations. Ensure impartiality in the process. In certain cases, that may mean hiring an outside consultant or outside legal counsel to conduct the investigation.
  • Thorough communication practices. A common objection asserted by complainants is that they are not informed about the status of an investigation. While complainants need not (and should not) be notified about the details or even given regular status reports, inform the complainant that an investigation will occur and be sure to provide closure—regardless of the outcome of the investigation.
  • A proactive approach. Consider conducting employee engagement or climate surveys (with or without a consultant) to better understand the work atmosphere, rather than simply reacting to workplace complaints. Before doing so, consult with counsel to determine whether and how such a survey may be conducted (potentially under the self-critical analysis privilege, depending on the jurisdiction) to avoid it unwittingly becoming evidence in a proceeding.
  • An atmosphere of inclusiveness. Foster an atmosphere of inclusiveness to help prevent sexual harassment. Make sure that your top-level management is involved in setting the tone, modeling appropriate behavior, and effecting positive change. Some organizations should consider creating a task force to root out and address inappropriate conduct—again with the oversight of legal counsel.
  • Effective training. While most employers conduct some form of anti-harassment training (and those that don’t offer training, should), make certain that your training is designed to effectively combat sexual harassment. Tailor the training to your specific workplace and audience. Use real-world examples of what is, and is not, harassment, and make sure that managers know how to spot potential issues and respond to any and all complaints.
©2017 Epstein Becker & Green, P.C. 
For more labor and employment news visit the National Law Review’s Labor and Employment page.

Insurance Coverage in the Post-Weinstein Era

With new headlines involving sexual harassment and other inappropriate sexual conduct continuing to emerge on a daily basis, insurance coverage for claims that might emerge is something every company should consider.

Recently, media reports have discussed settlements of shareholder derivative claims against members of the boards of directors and other senior executives of public companies. These settlements illustrate both the type of corporate liability that can ensue from allegations that a company turned a blind eye to, or otherwise failed to prevent, sexual misconduct allegations, causing financial and reputational harm to the organization, and the critical role insurance can play in protecting companies and their executives against such claims.While reports indicate that one or more of the settlements is being funded entirely from insurance proceeds, it is unclear whether the settlement proceeds will be coming from D&O insurance or EPLI insurance, or both. D&O insurance is intended to cover corporate mismanagement claims but typically contains some form of employment practices liability exclusion. EPL insurance is intended to cover employment practices liability claims but may not cover management liability claims arising from allegations of sexual harassment. This creates a potential gap in coverage that could have serious consequences.

D&O and EPLI policies are not standard and contain different wording and exclusions.

WHAT TO DO?

In this environment, it behooves corporate management of every company to understand the scope of insurance coverage for sexual harassment and management liability claims and to ensure that appropriate coverage is in place without coverage gaps.

Here is what policyholders should do: comprehensively review all relevant corporate insurance programs to determine what coverage is in place for sexual harassment claims of any variety, and for claims arising from corporate actions that might be necessary in the wake of an issue or claim, such as claims of wrongful termination and defamation.

Policies to be reviewed should include CGL, EPL, D&O and E&O.

Determine whether coverage gaps exist and if so, consider enhancing coverage to ensure proper protection.

Understand what needs to happen in terms of notice to insurers in the event of a claim or knowledge of circumstances that might lead to assertion of a claim.

And be aware of the potential for coverage before agreeing to any payments or settlements that might preclude or limit coverage.

© 2017 Proskauer Rose LLP.
This post was written by Seth B Schafler of Proskauer Rose LLP.
Learn more at the Insurance Law Page on the National Law Review.

Chicago City Council Committee Approves Hands Off-Pants On Ordinance to Protect Hotel Employees

On October 2, 2017, the Chicago City Council Committee on Workplace Development and Audit approved an amendment to the Municipal Code (the “Ordinance”) that, if approved by the full City Council, will require hotel employers to equip hotel employees assigned to work in guestrooms or restrooms with portable emergency contact devices and develop and implement new anti-sexual harassment policies and procedures. The Ordinance is in response to multiple reports of sexual assault and harassment targeted at hotel employees by hotel guests.

The Ordinance in its current form will require hotel employers to (1) equip employees who are assigned to work in a guest room or restroom, under circumstances where no other employee is present in the room, with a panic button (at no cost to the employee) which the employee may use to summon help from other hotel staff if s/he reasonably believes that an ongoing crime, sexual harassment, sexual assault or other emergency is occurring in the employee’s presence; (2) develop, maintain and comply with a written anti-sexual harassment policy to protect employees against sexual assault and sexual harassment by guests; and (3) provide all employees with a current copy of the hotel’s anti-sexual harassment policy, and post the policy in conspicuous places in areas of the hotel where employees can reasonably be expected to see it.

With respect to the anti-sexual harassment policy mandates, employers must develop a policy that:

  • Encourages employees to immediately report to the employer instances of alleged sexual assault and sexual harassment by guests;
  • Describes the procedures that the complaining employee and employer shall follow in such cases;
  • Affords the complaining employee the right to cease work and leave the immediate area where danger is perceived until such time that hotel security or the police arrive to provide assistance;
  • Affords the complaining employee the right, during the duration of the offending guest’s stay at the hotel, to be assigned to work on a different floor or at a different station or work area away from the offending guest;
  • Provides the complaining employee with sufficient paid time to (a) file a complaint with the police against the offending guest, and (b) testify as a witness at any legal proceeding that may ensue as a result of such complaint;
  • Informs the employee that the Illinois Human Rights Act and Chicago Human Rights Ordinance provide additional protections against sexual harassment in the workplace; and
  • Informs the employee that it is unlawful for an employer to retaliate against any employee who reasonably uses a panic button or exercises any right under the Ordinance.

Employers in violation of the Ordinance would be subject to a fine between $250-$500 for each offense, and each day that a violation continues constitutes a separate and distinct offense.

Consequently, it is critical that Chicago hotel employers monitor the status of this Ordinance, which is now pending before the full City Council. If passed and signed into law, the Ordinance will take effect within 90 days of signature. Employers should consider preparations for providing panic buttons to those employees protected by the Ordinance and training hotel employees on their use, and revisiting anti-sexual harassment policies, whether stand-alone or included in employee handbooks, to ensure compliance with the Ordinance’s mandates. Additionally, employers should consider providing updated anti-sexual harassment and anti-retaliation training to all employees, including those who are assigned to work in guest rooms or restrooms, to ensure that all employees fully understand their employer’s policies and procedures.

This post was written by Shawn D. Fabian & Michael J. Roth of Sheppard Mullin Richter & Hampton LLP., Copyright © 2017
For more legal analysis go to The National Law Review

Five Lessons from FOX News and Trump on Sexual Harassment

Donald Trump Fox NewsThe recent accusations of sexual harassment against Roger Ailes at Fox News, and the response of a high-profile candidate for public office about how women should respond to sexual harassment have crystallized into an opportunity to learn from the mistakes of others.

Since the mid-1980s, we’ve all read about sexual harassment and been trained on it. For the last 25 years, I’ve studied it, investigated it, seen it, taught about it, warned about it, developed policies to guard against it, and defended companies accused of it. Here are a few lessons from these recent events:

A Quick Review

If you’ve avoided (whether by choice or by luck) these last few news cycles, former Fox News anchor Gretchen Carlson accused former Fox News Chairman and CEO Roger Ailes of sexual harassment. After an outside investigation and multiple women providing more examples of his alleged slimy behavior, Ailes is now gone. It happened quickly.

Then, in responding to questions about sexual harassment, a high-profile office-seeker went on record saying he hopes his daughter would quit if she were sexually harassed—and seek another career—which is, by all accounts, an impossibly unrealistic option for most women. Another family member, jumping on the grenade, made it worse when he tried to explain that what his dad actually meant was that a “strong” woman would not allow such sexual harassment to continue – implying (whether intentionally or not) either that strong women could control it, or would have the power to find other work.

Enough already. Sexual harassment is personal; it’s sensitive, and it’s complicated.

Five Quick Lessons

  • Lesson 1: Sexual harassment comes in many forms.

In 1986, 30 years ago, the U.S. Supreme Court determined that sexual harassment is a form of sex discrimination. Today, the law recognizes harassment that includes female-on-male, male-on-male, female-on-female, but most often we see the male-on-female harassment. Still.

  • Lesson 2: Most women don’t want to complain about it. Period.

Since the 90s, the research has repeatedly shown that complaining is the leastlikely response from women who were harassed. The more likely responses include (1) avoiding the harasser; (2) downplaying the gravity of it; (3) ignoring it; and (4) taking it head-on.

The EEOC’s recently released Select Task Force Report on the Study of Harassment in the Workplace explains in more detail that most women who are victims of harassment don’t ever complain about it. They just want to fly under the radar. There are a lot of reasons, but that’s for a much longer article in a different format. In sum, usually, it takes courage to complain.

  • Lesson 3: Know when to bring in outsiders.

Fox News did the right thing by bringing in an outside investigator—reportedly an outside law firm—to investigate the Carlson allegations. When the accused is in a position of power (like Ailes), such that other employees might be afraid to tell what they’ve actually experienced or seen, an internal investigator is usually not enough. An outside neutral has no attachment to the accused or accuser, and the results—whatever they are—in most cases, are more likely to be more thorough, more revealing, and more trusted.

Importantly, with an outside law firm as an investigator, you also have more opportunities to protect communications, advice, and other developments under the attorney-client privilege. That process must be carefully handled.

  • Lesson 4: Confidentiality is critical.

When employees report harassment, the law compels employers to investigate. We know investigations can be messy and trigger unexpected consequences. Practically, it makes sense to protect those who complain and those about whom complaints are made. Some sexual harassment (like the allegations against Ailes) is severe, while other accusations are more tame. In some cases, there really is no evidence of a hostile work environment and no evidence of harassment. Everyone needs to be protected.

For those of you chiding me for the NLRB’s sweeping decisions against blanket confidentiality rules, I know, I know. But, after being on the front lines of these investigations, confidentiality is critical to protecting everyone in an investigation, and to prevent retaliation.

Notably, even the EEOC’s Select Task Force acknowledges the need for the EEOC and NLRB to “jointly clarify and harmonize the interplay of the National Labor Relations Act and federal EEO statutes with regard to the permissible confidentiality of workplace investigations, and the permissible scope of policies regulating workplace social media usage.”

  • Lesson 5: Update your policies.

Good employers have good policies that encourage people to come forward. The EEOC’s Select Task Force Report emphasized that a modern, updated policy will include the following elements:

    • Clear explanation of prohibited conduct, including examples
    • Promises to protect against retaliation
    • Complaint process that provides multiple, accessible avenues of complaint
    • Promises to protect the confidentiality of harassment complaints to the extent possible
    • Processes for a prompt, thorough, and impartial investigation
    • Promises to take immediate, proportionate corrective action when harassment has occurred

Promises to respond appropriately to behavior that might not be legally actionable “harassment,” but that which—left unchecked—might lead to harassment

The Select Task Force Report also lists a host of other recommendations, including updating training. Practically, even the best of policies may not have prevented the conduct that Ailes is accused of committing, but let’s take this opportunity to try.

ARTICLE BY Jeanine M. Gozdecki of Barnes & Thornburg LLP
© 2016 BARNES & THORNBURG LLP

UK Employment Tribunal Awards £3.2m To Woman Called “Crazy Miss Cokehead” By Colleagues

Squire Patton Boggs (US) LLP law firm

The woman who was called “Crazy Miss Cokehead” by her manager has been awarded nearly £3.2m by an Employment Tribunal for sexual harassment, reportedly including £44,000 for injury to feelings and a further £15,000 in aggravated damages.

We originally posted a blog on this story in November 2013 http://www.employmentlawworldview.com/crazy-miss-cokehead-when-banter-goes-too-far/.  Following the liability hearing, the Tribunal found in favour of Svetlana Lokhova who worked for the London branch of the Russian bank Sberbank CIB (UK) Ltd.

The Tribunal found that 19 out of her 22 allegations were not well founded.  However, on the main issues, it was found that Ms Lokhova’s former manager, David Longmuir, had bullied and harassed her on grounds of sex (even in emails), reportedly suggesting that she needed to visit a Nigerian tribesman for sex to “calm her down”.  Other such put-downs included saying that she had only been hired “because of her t***” and poking fun at her perceived privileged background.

In a stinging attack on the Bank, the Tribunal heavily criticised its conduct of the proceedings and said that there had been a “deliberate” attempt to bully her at the liability hearing in relation to an allegation that Ms Lokhova took drugs.  It said, “That allegation is completely without foundation and should never have been put to her in cross examination”.  In a Jeremy Kyle-style twist, Ms Lokhova was so “incensed and appalled” by the allegation that she took a drug test during the hearing, which was negative.

There were a number of other aggravating factors in this case.  Mr Longmuir was not disciplined at all despite the strength of the evidence and carried on working for the Bank for a further year after the bullying, receiving a £168,000 pay-off when he eventually did leave.  While I am sure that this of course had no bearing at all on the Tribunal’s ruling, you might be aware that with the benefit of the tax breaks applicable to severance payments, this is the equivalent of an Employment Judge’s salary for some 20 months.  No reason at all why thatpay-off should have irritated the Tribunal.

The Tribunal further criticised Paolo Zaniboni (who is still the CEO of the London office) who took no action against Mr Longmuir despite the evidence against him and whom the Tribunal also found to be guilty of unlawful victimisation.

The Tribunal’s attitude towards the Bank and its view of the aggravating features of this case is, perhaps, reflected in the reported awards of £44,000 and £15,000 for injury to feelings and aggravated damages respectively, which (if those reports are right) are very high awards indeed compared to previous cases.   The £44,000 figure would represent nearly a 50% uplift on the previously-understood ceiling for such awards.

The Tribunal in this case found that Ms Lokhova, who earned £750,000 a year in salary and bonuses working in Equity Sales, “will never work in financial services again, on the basis of the medical evidence”.  They found that she was suffering from a moderately severe psychiatric illness and had been suffering from such since January 2012.  The bulk of her compensation therefore represented future loss of earnings.

Lessons for employers

An interesting point for employers arising out of this case is how to deal with a case like this to limit the potential financial sanctions.  In this case there were emails containing the abuse and therefore written evidence of it (however, in most cases there will not be).  It should have been obvious to the Bank that it was going to lose in relation to those allegations.  So what can you do by way of mitigation?

1.  In circumstances where internal investigations reveal that it is likely that the allegations of harassment are true, we suggest issuing an immediate apology to the complainant in relation to those allegations (and in extreme circumstances consider paying some money as compensation to the victim).

2.  If an individual brings a claim, give serious consideration also to conceding liability when it is obvious that the allegation is true (however, take legal advice before doing this). Continuing to defend allegations that are indefensible will increase your costs and could lead to the Tribunal finding that the complainant’s injury (either medical and/or to feelings) has been aggravated.  An early apology can improve your prospects of limiting the damage and you will be able to focus on the allegations that are, perhaps, capable of a defence.  A swift apology could limit the complainant’s ability to claim that stress and/or publicity had done fatal damage to his/her career path (especially in a small world like the City of London)  and so prevent such significant loss of earnings claims also.

3.  Further, think carefully what is put to a witness in Tribunal. There was no relevance of Ms Lokhova’s alleged drug habits to the main issues in this case (which was whether or not she had been bullied and harassed).  It is difficult to see how baiting her on the witness stand to try and “prove” that she was a drug addict was going to achieve anything and, in this case, the Bank scored a comprehensive own goal when she conclusively proved that she was not.

4.  Last, give visible consideration to the handling of any employee who is clearly guilty of inappropriate behaviours. It did not take the Tribunal decision to show the Bank that Mr Longmuir’s conduct should be regarded as unacceptable.  If an employer in those circumstances takes the decision not to act against an employee (for example because he/she is a real money-spinner or related to someone in senior management or a major client) then that is a judgment it is entitled to make but only once it has weighed that option against the additional compensation the harassed individual is likely to receive as a result.  A really scorching final warning would now seem to have been a better compromise.

5.  If there is a pay-off, make it as small as possible!

ARTICLE BY

Louise Martin
Squire Patton Boggs (US) LLP