The New York State Legislature and Governor Andrew Cuomo have reached agreement on a $168 billion budget deal for the 2019 fiscal year, which began on April 1, 2018. The budget includes several significant measures directed at both private and government employers regarding sexual harassment in the workplace.

Many of the measures mirror legislation that has been introduced in several other states as part of a nationwide push to respond to the #MeToo movement and the increased discourse around sexual harassment in the workplace. Among other things, the New York budget measures will:

• prohibit the use of nondisclosure clauses in settlements or agreements relating to claims of sexual harassment, unless the condition of confidentiality is the preference of the complainant;

• prohibit mandatory arbitration clauses for claims of workplace sexual harassment;

• require the New York State Department of Labor and Division of Human Rights to develop a model sexual harassment prevention policy and a model sexual harassment prevention training program for use by employers;

•  mandate the distribution of written anti-harassment policies in the workplace and require annual anti-harassment training for all employees; and

• expand protections against sexual harassment under the New York State Human Rights Law to “non-employees,” including contractors, subcontractors, vendors, consultants, and other persons providing services pursuant to a contract.

Use of Nondisclosure Clauses Restricted for Sexual Harassment Claims

The budget amends the State’s General Obligations Law and Civil Practice Law and Rules (“CPLR”) to prohibit nondisclosure clauses in any settlement, agreement or other resolution of a claim or cause of action, “the factual foundation for which involves sexual harassment,” unless it is the “complainant’s preference” to include such a confidentiality provision. Any such provision that would prevent the disclosure of the facts or circumstances that underlie the harassment claim would be deemed void and unenforceable unless agreed to by the complainant.

Specifically, the budget provision requires that any nondisclosure language be provided to all parties to the agreement and that the complainant be given 21 days to consider any such clause and its terms and conditions and to indicate agreement to the inclusion of the clause or mandate its removal. The provision further grants the complainant a 7-day revocation period to revoke a signed agreement containing a non-disclosure provision. The nondisclosure clause does not become effective or enforceable until after the 7-day revocation period has expired.

The restrictions on the use of nondisclosure clauses will take effect 90 days after the budget is signed into law by the Governor.

Prohibition on Mandatory Arbitration Clauses for Sexual Harassment Claims

The budget also amends the CPLR to void any provision in an employment-related contract or agreement entered into following the effective date of the law that requires the parties to submit claims relating to sexual harassment to mandatory binding arbitration and would insulate from “independent court review” any fact-finding made by, or the final determinations of, an arbitrator relating to claims of sexual harassment. The provision does, however, contain a carve-out for arbitration provisions included as part of a collectively bargained agreement, which shall remain enforceable.

The prohibition on mandatory arbitration clauses for sexual harassment claims also takes effect 90 days after the budget is signed into law.

Model Sexual Harassment Prevention Policy and Training Program

The budget further amends the Labor Law to require the Department of Labor and Division of Human Rights to collaborate in developing both a model sexual harassment prevention policy and a model sexual harassment prevention training program for use by employers in combatting sexual harassment in the workplace.

All New York employers will be required either to adopt the model policy and training program or to establish their own policy and training program that equals or exceeds the minimum standards that the two agencies develop. Employers will be required to distribute a harassment policy in writing to employees, and to provide sexual harassment training to all employees on at least an annual basis.

The model sexual harassment prevention policy shall:

• prohibit sexual harassment consistent with guidance from the Department of Labor and the Division of Human Rights, and provide examples of prohibited conduct;

• provide information on state and federal laws concerning sexual harassment and the remedies available to victims;

• include a standard complaint form and a procedure for a timely and confidential investigation of complaints that ensures due process for all parties;

• inform employees of their rights and all available forums for adjudicating complaints administratively and judicially;

• state that sexual harassment is considered a form of employee misconduct and that sanctions will be enforced against individuals engaging in sexual harassment and against supervisory and managerial personnel who knowingly allow such behavior to continue; and

• indicate that retaliation against individuals who complain of sexual harassment or those who testify or assist in any legal proceeding is unlawful.

The model sexual prevention training shall include:

• an explanation of sexual harassment and examples of prohibited conduct;

• information on state and federal laws concerning sexual harassment and remedies available to victims;

• a section addressing conduct by supervisors and additional responsibilities for such supervisors; and

• information on employees’ rights and all available forums for adjudicating complaints administratively and judicially.

The obligations to circulate written anti-harassment policies and enact annual anti-harassment training will take effect 180 days after the budget is signed into law.

Employer Liability for Sexual Harassment Against “Non-Employees”

The budget also amends the Executive Law to extend liability under the New York State Human Rights Law to employers who “permit” sexual harassment of “non-employees” in their workplace. Under the amendment, an employer may be held liable to a contractor, subcontractor, vendor, consultant, or other person providing services pursuant to a contract in the employer’s workplace with respect to sexual harassment where the employer, its agents or supervisors knew or should have known about the harassment and failed to take “immediate and appropriate corrective action.” In reviewing such cases, the extent of the employer’s control over the conduct of the harasser shall be taken into account.

The non-employee harassment protections take effect immediately upon signing by the Governor.

Anti-Sexual Harassment Measures for State Contractors and Public Employers

The budget includes measures targeted specifically at state contractors and public employers and employees.

With regard to state contracts, bids will be required to contain language affirming that the bidding entity has implemented a written policy addressing sexual harassment in the workplace and that it provides annual sexual harassment preventing training to all of its employees. Bids that do not contain such language shall not be considered, unless the bidder can furnish a signed statement setting forth the reasons why it cannot attest to the requirements. The state contract provisions are slated to take effect on January 1, 2019.

The budget will also require state employees found responsible for committing sexual harassment to reimburse any state agency or public entity-funded damages award payments within 90 days of the payout of the award by the state.