On April 12, 2018, Governor Andrew Cuomo signed into law a 2019 New York budget implementing the provisions of S-7848A (the “Budget”). Beyond the obligations created by S-7848A, which we summarized in a previous post, the Budget also obligates employers in the state to, in compliance with state standards: (i) distribute a written sexual harassment policy; and (ii) perform annual sexual harassment training. The full impact of the Budget on employers is detailed below.

Mandatory Arbitration Agreements for Sexual Harassment Claims Prohibited

The Budget amends the New York Civil Practice Law and Rules (“CPLR”) to render void agreements requiring the submission of sexual harassment claims to mandatory binding arbitration. The Budget does, however, carve out arbitration requirements for sexual harassment claims that are included as part of a collective bargaining agreement. This prohibition is set to take effect on July 11, 2018. However, because United States Supreme Court has routinely held that state laws that expressly identify a category of non-arbitrable state law claims are preempted by the Federal Arbitration Act, it remains to be seen whether this provision will ultimately be enforceable.

Confidential Settlement Agreements for Sexual Harassment Claims Prohibited Without Complainant Consent

The Budget further amends the CPLR to prohibit courts from approving confidential settlement agreements for sexual harassment claims, unless: (i) confidentiality is the complainant’s preference; (ii) the complainant has been given 21 days to consider the confidentiality provision; and (iii) the complainant is given 7 days in which to revoke his or her acceptance of the confidentiality provision. This provision of the Budget will take effect on July 11, 2018.

Sexual Harassment Protections Extended to Non-Employees

Like S-7848A, the Budget extends liability under the New York State Human Rights Law to employers who “permit” sexual harassment of “non-employees,” including independent contractors. This provision becomes effective immediately.

Required Sexual Harassment Policies

The Budget amends the New York Labor Law to require the New York Department of Labor (“NYSDOL”) and the New York State Division of Human Rights (“NYSDHR”) to collaborate to develop a model sexual harassment prevention policy, and requires all New York employers to either adopt the model policy or develop their own policy compliant with the model’s standards. The model sexual harassment prevention policy is required to contain the following elements:

• A statement prohibiting sexual harassment;

• Examples of prohibited conduct that would constitute sexual harassment;

• Information concerning the federal and state statutory provisions concerning sexual harassment and remedies available to victims, along with a statement that there may be additional applicable laws;

• A standard complaint form;

• The procedure for timely and confidential investigation of complaints;

• A statement informing employees of their rights of redress and available forums for adjudicating sexual harassment complaints administratively and judicially;

• A statement that sexual harassment is a form of employee misconduct, and that sanctions will be enforce against individuals engaging in sexual harassment and managers and supervisory personnel who knowingly allow such behavior to continue; and

• A statement that retaliation against individuals reporting sexual harassment or who testify or assist in any proceeding is unlawful.

Employers are required to prepare and distribute a compliant written policy by October 9, 2018.

 Required Sexual Harassment Training

 The Budget also requires the NYSDOL and NYSDHR to develop a model sexual harassment prevention training program, and requires employers in the state to either present the state-approved model or their own model compliant with state standards on an annual basis. The training program must be interactive, and contain the following elements:

• An explanation of sexual harassment;

• Examples of conduct that would constitute unlawful sexual harassment;

• Information concerning the federal and state statutory provisions concerning sexual harassment and remedies available to victims; and

• Information concerning employees’ right of redress and all available forums for adjudicating complaints.

Employers are required to implement compliant annual training programs by October 9, 2018.

Next Steps for Employers

New York employers can take several steps to prepare for the new requirements created by the Budget. As an initial matter, employers should evaluate existing sexual harassment prevention policies and education regarding non-employees in the workforce, including independent contractors. Next, employers should review existing sexual harassment policies and training programs for compliance with the Budget’s minimum standards, and revise them accordingly if necessary. Finally, New York employers should review standard settlement and arbitration agreements in connection with sexual harassment complaints, and revise them in light of the Budget’s requirements. However, employers should keep in mind that the Budget’s interplay with the Federal Arbitration Act has yet to be determined.