Category: Labor & Employment

Ruth Bader Ginsburg, Max Scherzer, a $5 million settlement, and How They All Relate to Workplace Parental Leave Policies

Washington Nationals’ pitching ace Max Scherzer recently took parental leave and helped shine a light on a hot employment topic: ensuring that employers’ parental leave policies are fair and gender-neutral.

This issue also gained attention in May 2019 when JPMorgan Chase, one of the world’s largest banks, reached a $5 million settlement about the bank’s parental leave program. As part of the settlement, the bank will make payments to a group of male employees who were discouraged from taking 16 weeks paid parental leave to care for a new child. The settlement also directs JPMorgan Chase to implement a parental leave program that is fair and gender-neutral. JPMorgan Chase denied the allegations.

At first glance, JPMorgan Chase’s parental leave program seemed gender-neutral. It offered 16 weeks of paid leave for “primary caregivers” and 2 weeks for “secondary caregivers.” The bank, however, allegedly applied the policy differently when a male employee versus a female employee requested leave. That is, female employees requesting parental leave were presumed to be the primary caregivers, while male employees were presumed to be the secondary caregivers. The plaintiffs claimed that, for a male employee to receive parental leave as a primary caregiver, he had to show that his spouse or domestic partner had returned to work, or that he was the spouse or partner of a mother who was medically incapable of caring for the child. Female employees who had given birth themselves were not subject to this requirement.

The named plaintiff in the settlement, Derek Rotondo, requested 16 weeks of parental leave as a “primary caregiver” after the birth of his second child. Human resources, according to Rotondo, informed him that a father requesting parental leave would only be considered a “primary caregiver” if he could show that the mother had to return to work before the 16 weeks elapsed, or that she was “medically incapable” of caregiving. Rotondo could not demonstrate either option, and he received only two weeks of parental leave.

Rotondo then filed a charge of discrimination with the Equal Employment Opportunity Commission challenging JPMorgan Chase’s practice of denying primary caregiver leave to fathers. He also filed a class action complaint on behalf of himself and similarly situated individuals. Rotondo received 16 weeks parental leave, and the five thousand other male employees who were denied parental leave as a “primary caregiver” will be compensated from a fund created by the $5 million settlement.

This is not the first time that a step towards gender equality was taken in a case involving male plaintiffs who sought caregiver benefits, only to find out that the benefits are not available to them because they are men. Rotondo was represented by lawyers from the A.C.L.U.’s Women’s Rights Project, which was founded by now-Justice Ruth Bader Ginsburg in the early 1970’s. Ginsburg was an A.C.L.U. lawyer when she argued Moritz v. Comm’r of the Internal Revenue System before the U.S. Court of Appeals for the Tenth Circuit.

Moritz was the first federal court case to hold that discrimination on the basis of sex is unconstitutional. In that case, Moritz claimed a tax deduction for the cost of a caregiver for his mother, but the IRS denied it because the agency only allowed the deduction to be claimed by women and formerly married men. Ginsburg argued that no rational basis in the law exists for treating men and women differently. Moreover, she argued that the proper remedy was to allow men to claim the deduction as well, instead of eliminating the deduction for everyone.

Of course, in some families one parent is the primary caregiver to the children and one parent, for whatever reason, needs to return to work more quickly than their partner. The larger problem (for companies and their employees) is where the employer presumes a connection between an individual’s gender and that individual’s role at home. Doing so presumptively differentiates among employees and their parental leave needs based on sex. The settlement between JPMorgan Chase and their employees demonstrates that companies do so at their own risk.

As Supreme Court Justice Ruth Bader Ginsburg noted, “[w]omen will have achieved true equality when men share with them the responsibility of bringing up the next generation.”

 

© 2019 Zuckerman Law
This article was written by Eric Bachman of Zuckerman Law.
For more on parental leave policies, please see the Labor & Employment page on the National Law Review.

“Bikini Baristas” Ordered to Cover-Up

The 9th Circuit court of appeals has enforced the City of Everett, Washington’s Dress Code Ordinance and amendments to the Lewd Conduct Ordinances. These ordinances require employees of “Quick-Service” facilities to cover “minimum body areas” (the dress code ordinance specifically stated that it was targeting an apparent influx of “bikini barista stands”). The owner of “Hillbilly Hotties,” a coffee stand where employees wear only bikinis, and several of the bikini baristas themselves challenged the ordinances as unconstitutionally vague. Plaintiffs also alleged that the Ordinances violated their First Amendment right to free expression.

The Court of Appeals reversed a lower court ruling that prohibited enforcement of the Ordinances on the ground that they are unconstitutionally vague. The appeals court explained that a person of ordinary intelligence would be able to understand the terms in the Ordinance and would be adequately informed of which body areas cannot be exposed or displayed.

The Ninth Circuit also concluded that Plaintiffs’ first amendment claim faltered based upon their failure to show a great likelihood that their intended message would be understood by those who received it. The court found that the baristas’ acts of wearing pasties and g-strings in close proximity to customers did not necessarily convey the baristas’ purported message of female body confidence and empowerment.

Read the full decision here.

 

© 2019 Proskauer Rose LLP.
This article was written by Anthony J Oncidi and Cole D. Lewis of Proskauer Rose LLP.
For more on First Amendment questions please see the National Law Review Constitutional Law page.

Taking Vacation While on Medical Leave: Massachusetts Court Rules on Liquidated Damages Under the FMLA

On June 5, 2019, the Massachusetts Supreme Judicial Court (SJC) issued a decision emphasizing that an employer’s well-designed and thorough internal investigations made prior to a termination decision can provide a strong defense to claims, but less carefully conducted investigations do not.

In DaPrato v. Massachusetts Water Resources Authority, the Massachusetts Water Resources Authority (MWRA) terminated DaPrato’s employment because of its “honest belief” that his family vacation to Mexico during the last two weeks of his Family and Medical Leave Act (FMLA) leave for recovery from foot surgery was an improper use of the leave and warranted termination. The court rejected that position, and clarified the employer’s burden to avoid the award of liquidated damages (i.e., double damages) in claims brought pursuant to the FMLA.

The FMLA states that a judge “shall” award liquidated damages in accordance with statutory provisions if an employer is found liable for violating the FMLA. However, when an employer demonstrates that its conduct was “in good faith and that the employer had reasonable grounds for believing that [its action] was not a violation [of the FMLA]” liquidated damages are in the discretion of the judge and are not mandatory. The MWRA argued such discretionary authority should be available due to a “belief that the employee had misused FMLA leave, even if that belief is mistaken.”

The SJC emphasized that the statute requires employers to act both “in good faith” and on “reasonable grounds.” Applying this standard, the court found that, even though the defendant honestly believed it was complying with the FMLA, it lacked objectively reasonable grounds for such belief. Notably, the SJC found the MWRA’s investigation ignored the employee’s FMLA application and medical records and instead was grounded in “shock, outrage and offense” at the possibility of further FMLA leave for a scheduled knee surgery.

The MWRA’s policy that considered impermissible all vacation taken while on FMLA leave fell short the requirement that it be in good faith and reasonable. The SJC explicitly noted that an employer may not treat the mere fact that an employee went on vacation during FMLA leave, on its own, as impermissible. Instead, a vacation can be permissible or impermissible in terms of consistency with medical leave depending on whether the employee’s conduct while on vacation is consistent with his or her claimed reasons for medical leave. Only when an employer is privy to such information regarding the employer’s conduct may it consider inconsistencies between the conduct and the claimed reasons for leave when evaluating whether leave has been properly or improperly used. Here, a blanket assumption that the employee’s vacation represented an improper use of leave time and the failure to properly investigate left the MWRA unable to obtain a lesser liquidated damages amount.

Key Takeaways

While the decision focused on the narrow “honest belief” exception to liquidated damages in the FMLA, it should remind employers of the importance of objectivity in their investigations. In the context of an FMLA investigation, DaPrato reminds employers to ensure that they avoid decisions that are “honest but unconsciously biased” where, as here, the employer mistakenly believed an employee on FMLA leave could not legitimately take a vacation. Only by satisfying both the good faith and reasonableness requirements—which in this case mandated knowledge of the law surrounding employee use of vacations while on FMLA leaves—could this employer have avoided liquidated damages. Thus, DaPrato should prompt employers to be even more cautious when discharging employees for perceived misconduct and ensure their internal investigations are thorough, fair, and objective.

© 2019, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
For more on FMLA policies see the National Law Review page on Labor & Employment.

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 Legislature Passes Bill Allowing Employees to Place a Lien on Employer’s Property for Wage Claims

The New York Senate and Assembly recently passed Senate Bill S2844B to strengthen current laws for employees who are victim of wage theft to secure and collect unpaid wages for work already performed from their employers. This bill would amend five sections of the law (Lien Law; Labor Law; Attachment under the Civil Practice Law and Rules; the Business Corporations Law; and the Limited Liability Law). If signed by the Governor, this bill would create a broad right for any employee to obtain a lien on an employer’s property based on the allegation of a wage claim and would significantly increase employee power in such disputes.

This bill would expand on current lien remedies and create an “employee lien,” that would allow an employee who has a wage claim to place a lien on his or her employer’s interest in property (real or personal property) for the value of that employee’s wage claim, plus liquidated damages. “Wage claim” is defined as any claim constituting a violation of New York Labor Law § 170 (overtime), § 193 (improper deductions), § 196-d (gratuities) , or § 652 and § 673 (minimum wage). Wage claims also include claims for breach of employment contract where wages are not payed under the contract, and Federal minimum wage claims pursuant to 29 U.S.C. § 206 and § 207. The employee’s lien cannot be placed on an employer’s deposit accounts or goods.

Notice of the lien must be filed within three years of the end of employment which gave rise to the wage claim. Real property notice must be filed in the clerk’s office of the county where the property is located. Personal property notice must be filed with a financing statement pursuant to section 9-501 of the Uniform Commercial Code. Employee’s liens may be filed by the employee or the New York State Department of Labor and the New York Attorney General for wage claims that are subject of their investigations, court actions or administrative agency actions. Notice of an employee’s lien must be served upon the employer within five days before or 30 days after filing notice. The lien is valid for one year unless extension is filed with the county clerk. If no action is commenced during the extension period, the lien will be automatically extinguished unless extended by a court order.

If passed, this bill would also streamline the procedures to which employees may hold the ten largest shareholders of a non-publicly traded corporation and the ten members with the largest ownership interests in a limited liability company personally liable for wage theft. The bill also contains a provision that would allow employees to examine a business corporation’s and limited liability company’s records to obtain the shareholders’ or members’ (as the case may be) names, addresses, and ownership value in the company.

Once the bill is signed by the Governor, it will take effect 30 days after becoming law and will apply to all claims for liabilities that arose prior to its passage.

Copyright © 2019 Robinson & Cole LLP. All rights reserved.
For more on wage-hour issues, see the National Law Review Labor & Employment page.

But I’m in HR – What Do You Mean I Can Go to Jail?

Wage and hour laws.  Child labor laws.  OSHA laws.  Immigration laws.  When employers do not comply with these types of employment laws, civil charges and lawsuits are not the only things that can happen.  In what may come as an unwelcome surprise to employers, and to Human Resources, in particular, these laws have criminal penalties embedded in them too.

For example, willful violations of the Fair Labor Standards Act (FLSA) – the federal wage and hour law that also contains certain child labor provisions – may be prosecuted criminally, with violators subject to potential fines of up to $10,000.  Various states also have their own wage and hour laws, and many of them include criminal sanctions.

Although the Department of Justice and administrative agencies enforce laws like the FLSA less or more vigorously, depending on who is president, a case from 2013, during the Obama administration, is instructive.  In that FLSA matter, a company and its owner, plant manager, and office manager were all convicted of various felony counts.  The facts were extreme, including that the employer had a history of FLSA violations, submitted false payment evidence to the Department of Labor during its investigation, demanded kickbacks from workers while continuing to fail to pay overtime, and kept a second set of time records hidden from investigators.  These facts resulted in criminal convictions for the company and three of its management individuals.

The Department of Justice also enforces certain immigration laws that carry potential criminal penalties for employers.  These laws are especially noteworthy in today’s atmosphere of heightened immigration enforcement.  Employers who unlawfully employ persons who are not authorized to work in the United States could be subject to criminal prosecution.  Federal and state OSHA laws also contain criminal in addition to civil penalty provisions.

We know that Human Resources professionals can sometimes have a hard time convincing other leaders in an organization to listen to their suggestions.  It can be very frustrating, for example, when HR knows that certain employment policies need to be revised or certain payment methods may not comply with legal requirements, and yet other members of the management team will not make the changes.

One way HR can help guide managers who need to make decisions about certain employment policies – and to get their attention – is to point out that not only can failure to follow certain laws result in expensive civil lawsuits; but sometimes they can also result in criminal prosecution.  Though rare, these prosecutions and convictions do happen – something clearly all HR and all managers want to avoid.

Are you likely to go to jail as an HR professional under these laws?  Not likely.  Nonetheless, HR professionals should be aware of the possibilities and be prepared to discuss them when educating management.

© 2019 Foley & Lardner LLP
For more on employment matters, see the National Law Review Labor & Employment page.

NLRB Will No Longer Require Employers to Permit Union Organizers in “Public Space” on Employers’ Property

Overruling 38 years of precedent, the NLRB has determined employers have no duty to permit union organizers to use “public space” to solicit union support on their property.  UPMC and SEIU, 368 NLRB No. 2 (June 14, 2019).

UPMC is a hospital system based in western Pennsylvania.  SEIU organizers visited the hospital cafeteria and distributed organizing materials to employees over lunch discussing union organizing activity. The hospital maintained a no-solicitation practice that prohibited nonemployees from using the cafeteria for purposes of solicitation.  When the hospital learned of the union organizers’ presence and purpose, they were asked to leave the cafeteria by security guards, and when they refused, local police were summoned and escorted the organizers off the property.  The Union filed unfair labor practice charges, alleging that this act was illegal.

The NLRB disagreed. Since 1981, the NLRB has created an entitlement to union agents to obtain access to “public space” – or, space in an employer’s property open to the public – for the purpose of soliciting union support among employees.  Typically, the “public space” involved a cafeteria or a restaurant, and union agents were permitted to use the space in a manner consistent with its intended use as long as they were not disruptive.  Montgomery Ward & Co., 256 NLRB 800, 801 (1981).

“The Board’s approach has been soundly rejected by multiple circuit courts (of appeal).”  In support of this finding, the Board recited decisions from the circuit courts of appeal of the 6th, 4th and 8th circuits, concluding the “public space” exception was insupportable in light of the United States Supreme Court decisions that permit employers to prohibit union agents from entering an employer’s property for organizing activity if the union could appeal to employees through other means and if the employer does not discriminate against unions by permitting other persons or organizations from soliciting on its property.  NLRB v. Babcock & Wilcox, 351 U.S. 105, 112 (1956).  Even when those conditions exist, the United States Supreme Court has held both of these exceptions are “narrow” and unions have a “heavy” burden of proof to establish the exception.  Sears Roebuck & Co. v. San Diego District Council of Carpenters, 436 U.S. 180, 205 (1978).

The NLRB agreed with the judicial criticism of its previous precedent and held:

… to the extent that Board law created a “public space” exception that requires employers to permit nonemployees to engage in promotional or organizational activity in public cafeterias or restaurants absent evidence of inaccessibility or activity-based discrimination, we overrule those decisions.

While the NLRB decision stops short of rejecting the policy of “nonacquiescence” where the Board ignores circuit court precedent which refuses to enforce its orders, it is illustrative of a growing sensitivity to the maintenance of Board law that is inconsistent with the precedent of the United States’ courts which refuse to enforce flawed NLRB precedent.

© 2019 Dinsmore & Shohl LLP. All rights reserved.
This article was written by Mark A. Carter and Brian J. Moore from Dinsmore & Shohl LLP.
For more on Union matters, see the National Law Review Labor & Employment page.

UPDATE: NCAA Flexes Its Muscle in Response to California Fair Pay To Play Act

NCAA President Mark Emmert has predicted that it would become “impossible” for the NCAA to consider California colleges eligible to participate in national championship competitions should California pass the Fair Pay To Play Act (SB 206) and allow college athletes to maintain their amateur status while accepting pay for marketing their name, image and likeness (as discussed in our recent blog posts on March 4, 2019, and May 23, 2019).

Emmert stated this in a letter to Senator Nancy Skinner, the sponsor of the proposed legislation, and the Chairpersons of two California State Assembly Committees (the Arts Entertainment, Sports, Tourism and Internet Committee and the Higher Education Committee).

Emmert has requested the two committees postpone consideration of the proposed legislation while the NCAA convenes an investigatory working group of school presidents and athletics administrators who will be reviewing the current prohibition on NCAA athletes earning income from the use of their names, images, and likenesses. The working group, led by Big East Commissioner Val Ackerman and Ohio State University Athletic Director Gene Smith, is authorized to propose specific recommendations to potentially reform and modify current NCAA Bylaws.

In his letter, Emmert recognized the California legislature’s efforts in developing the bill, but noted, “when contrasted with current NCAA rules,

the bill threatens to alter materially the principles of intercollegiate athletics and create local differences that would make it impossible to host fair national championships.”

Emmert continued, “… it likely would have a negative impact on the exact students athletes it intends to assist.”

The timing of President Emmert’s request presents a dilemma for the California state legislature as the Ackerman and Smith-led NCAA group is not scheduled to update the NCAA Board of Governors until August and will not issue a final report until late-October, more than a month after the end of the current California legislative session considering SB 206.

SB 206 was just approved by the Committee on Arts without any formal opposition. The bill is now headed to the 12-member Committee on Higher Education, which must express its approval before July 11 and before the 61 Democratic members of the full 80-member California assembly will have an opportunity to consider the bill.

In its current form, the legislation would prohibit a California postsecondary educational institution, athletic association, conference, or any other organization with authority over intercollegiate athletics, from preventing student-athletes from earning compensation in connection with the use of the student-athlete’s name, image, or likeness. This would result in colleges, such as perennial sports powers like UCLA, USC, the University of California, and Stanford from being unable to stop their male and female student-athletes from signing endorsement deals or licensing contracts under the NCAA prohibition, circumventing the power and authority of the NCAA.

Senator Skinner responded to Emmert’s letter, saying, “It’s definitely a threat to colleges.”

She continued, “And this is what I think is so ironic: They are colleges. The NCAA is an association of colleges, and yet they’re threatening California colleges and saying that they would not allow them to participate in championships if my bill passes.”

Skinner reminded the public that if her bill were signed into law, it would not go into effect for another three years. She said the NCAA would have ample time to assess its own rules regarding student-athlete compensation. “Both the colleges and the NCAA have plenty of time to do the right thing,” she said.

Jackson Lewis P.C. © 2019
For more on NCAA and other sports news see the National Law Review page on Entertainment, Art & Sports.

A Judge’s Tips for Keeping Trade Secrets “Secret”

Just because information is sufficiently sensitive and valuable that it can qualify as a “trade secret” does not mean that it will qualify unless the owner of the information takes adequate steps to protect its secrecy.

In a recent decision, Judge John J. Tharp, Jr., of the U.S. District Court for the Northern District of Illinois explained that “there are two basic elements to the analysis” of whether information qualifies as a “trade secret”: (1) the information “must have been sufficiently secret to impart economic value because of its relative secrecy” and (2) the owner “must have made reasonable efforts to maintain the secrecy of the information” (internal quotation marks omitted).[1]

According to Judge Tharp, some of those “reasonable efforts” that a company can take to maintain the secrecy of its information include:

  • using non-disclosure and confidentiality agreements with employees;
  • enacting a policy regarding the confidentiality of business information that is more detailed than a mere “vague, generalized admonition about not discussing [company] business outside of work”;
  • training “employees as to their obligation to keep certain categories of information confidential”;
  • asking departing employees whether they possess any confidential company information, and, if they do, instructing them to return or delete it;
  • adequately training IT personnel about data security practices;
  • restricting access to sensitive information on a need-to-know basis; and
  • as appropriate, labelling documents “proprietary” or “confidential.”

As Judge Tharp made clear, companies that fail to institute reasonable measures to protect sensitive information do so at their own peril.

[1] Abrasic 90 Inc. v. Weldcote Metals, Inc., No. 1:18-cv-05376 (N.D. Ill. Mar. 3, 2019) at 11.

 

©2019 Epstein Becker & Green, P.C. All rights reserved.
This article was written by Peter A. Steinmeyer and Erica McKinney from  Epstein Becker & Green, P.C.
For more on employer/employee relations see the National Law Review Labor & Employment 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.