In this episode of The Proskauer Brief, Harris Mufson and Allan Bloom discuss recent legislative developments in New York regarding sexual harassment. We will discuss recently enacted significant measures, including the prohibition of nondisclosure clauses in settlement agreements, unless the complainant prefers confidentiality, mandatory training requirements and the expansion of the NYS Human Rights Law to nonemployees including contractors, subcontractors, vendors, and consultants.

Harris Mufson: Hello, welcome to the Proskauer Brief: Hot Topics on Labor and Employment Law. I’m Harris Mufson and on today’s episode I’m joined by Allan Bloom and we’re going to discuss recent significant legislative developments directed at employers in New York regarding sexual harassment in the workplace.

So Allan, the New York State budget deal for 2019 includes several significant measures regarding sexual harassment. One of those significant measures prohibits the use of nondisclosure clauses in settlement agreements relating to claims of sexual harassment, unless the condition of confidentiality is the preference of the complainant. Can you explain how this is going to work?

Allan Bloom: Harris, this has been a big subject of conversation in the U.S. in the last few months. Can you prohibit employees from talking about their experiences? And this part of the budget amends the law and what it says is that if someone has a claim of sexual harassment — if that’s the factual foundation for their claim — you cannot enter into an agreement with them, even if you’re paying them money under which they can’t disclose those allegations or the facts – unless as you said the employee consents to that provision being in there as his or her preference.

So how it works under this bill, if the Governor signs it and it becomes law, you would need to give the employee 21 days to review the non-disclosure language, and if after that 21-day period the employee agrees that he or she will not disclose those facts, then you can include that provision in your agreement. The employee would have 7 days to revoke his or her acceptance of that agreement and that provision and only after that time period do you now have a valid nondisclosure agreement with respect to those sexual harassment facts and allegations.

Harris Mufson: And most employers, I think, are familiar with that sort of a process to achieve a release under the ADEA so it’s a similar type process.

Allan Bloom: It’s a very similar process as a release under the federal age laws. In this case, however, it’s not clear that you can sign that agreement prior to that 21-day period expiring. So for the moment employers have to assume you need to give that document to the employee for the full 21 days to review, then wait another 7 days after that for that revocation period to end. So it’s essentially a month between the time you present an agreement to the employee and the time that it becomes effective.

Harris Mufson: So another provision in the budget is a prohibition on mandatory arbitration clauses for claims of workplace sexual harassment. Can you touch on that a little bit?

Allan Bloom: Sure, this one’s a little bit more controversial. The Federal Arbitration Act allows employers and employees to agree to arbitrate claims of employment discrimination; it’s been that way for decades. This part of the new law would prohibit a clause in an arbitration agreement that would require an employee to arbitrate claims of sexual harassment. And so, employers need to go back and look at their arbitration policies and agreements to see whether or not a sexual harassment claim is included or not included in their arbitration program or arbitration agreements.

Harris Mufson: Are there any carve outs in the law that would permit mandatory arbitration of sexual harassment claims in any context?

Allan Bloom: There’s some loose language in the bill that says “except where inconsistent with federal law.” So as I said earlier, I think you will see some challenges to this new law if it is signed by the Governor on the ground that it conflicts with the Federal Arbitration Act, which generally would allow you to arbitrate these kinds of claims.

Harris Mufson: Another provision in the budget requires the development by The State Department of Labor and The Division of Human Rights of a model sexual harassment prevention policy and a model sexual harassment prevention training program for use by employers, and also mandates a distribution of certain anti-harassment policies and requires training for all employees. Can you talk a little about that provision?

Allan Bloom: This is the provision with the longest runway. It’s not going to take effect until six months after the Governor signs the bill and, as you said, The Division of Human Rights and The Department of Labor are going to come out with these model policies, this model guidance, and employers are required either to adopt those policies or to come up with policies of their own that are at least as detailed and specific. So it’s wait and see. We’ll have to all wait and see what the model policy looks like from these two state agencies; and if your policy is not as protective, as detailed, as these policies are then you’ve got to revise your policies and bring them into compliance with these new model documents.

Harris Mufson: And the training requirement: is that annual training that’s required?

Allan Bloom: It is annual training and assumedly an employer could get credit if it has already conducted training this year that is at least as robust as the training that those agencies are going to describe when they come out with their model documents.

Harris Mufson: So Allan, the last significant provision in this proposed budget deal is one that expands protections against sexual harassment under the New York State Human Rights Law to nonemployees: those being contractors, subcontractors, vendors, consultants and other persons providing services pursuant to a contract for an employer. How is that different than the existing provisions currently under the New York State Human Rights Law?

Allan Bloom: Historically employers have had to protect their own employees from harassment and from discrimination. Under this new law it’ll be unlawful for an employer to permit sexual harassment of non-employees in its workplace: contractors, vendors, subcontractors. And so, the standard will be a negligence standard. Did the employer know or should it have known that a nonemployee was being subjected to sexual harassment and did it fail to take immediate and appropriate corrective action? So it’s going to make employers be ever more mindful of nonemployees that are performing services in their workplace and employers will likely have to revisit their policies and prohibit the harassment — certainly the sexual harassment — of this group of newly protected workers.

Harris Mufson: Thank you for joining us on the Proskauer Brief today. Stay tuned for more insights on the latest hot topics and labor and employment law and be sure to follow us on iTunes.