As 2018 draws to a close, it is worth taking a closer look at the increasing legal impact of the #MeToo movement. The chorus of victims’ voices and the media spotlight exposed the prevalence of sexual misconduct in the workplace.  As a result, state legislatures passed reform measures to create new laws—from New York’s mandate to businesses to adopt comprehensive anti-harassment policies and training to California’s required percentage of women serving on boards of publicly traded companies—with many other states banning or seeking to ban mandatory arbitration and non-disclosure agreements in harassment cases.  This post examines what is happening in the courts and the effect of the #MeToo movement on sexual harassment litigation. So far, there has been a significant uptick in harassment claims, enforcement actions and damage recoveries at the Equal Employment Opportunity Commission (“EEOC”), indications of increased punitive damages awards from juries, and, perhaps most significantly, cracks in the foundation of the Faragher-Ellerth affirmative defense often relied upon by employers to win summary judgment in sexual harassment cases.

The EEOC Turns Up The Heat

The EEOC, the federal agency that enforces Title VII’s prohibition on employment discrimination, published an important Task Force Report in 2016 that comprehensively addressed the root cause of workplace sexual harassment and the best practices to eradicate it. https://www.eeoc.gov/eeoc/task_force/harassment/task_force_report.cfm.  In October 2018, the EEOC issued noteworthy statistics comparing FY 2017 (predating #MeToo) to FY 2018 (10 months after #MeToo exploded in the fall of 2017). There were significant upticks in activity in sexual harassment cases: charges filed were up by 12%, EEOC lawsuits increased by 50%, and damages recovered in cases increased by 67%.  Preventing systemic sexual harassment is one of the EEOC’s six substantive priorities for fiscal years 2017-2021 and this increased focus is here for the foreseeable future.

More Punitive Damage Awards

Two recent large punitive damage awards in sexual harassment cases in NYC and Boston may be a harbinger of a trend in trying such cases in the #MeToo era.  In March 2018, a New York federal court jury awarded a long term employee at a Yonkers sugar cane factory $13.4 million dollars, including $11.7 in punitive damages for the barrage of humiliating sexual comments from her stockroom supervisor she endured for years. The trial judge ultimately reduced the award to $800,000 to conform to federal and state law limits on damages but the jury’s strong message should be heard nonetheless. In August of 2018, a Boston state court jury awarded a salesperson at an auto dealership $3 million in punitive damages on her sexual harassment case for similar conduct.  In Massachusetts, a spike in punitive damage awards in all discrimination cases since the Weinstein case exploded is viewed by many employment lawyers as a response to the #MeToo Movement.

Informed by #MeToo, Court of Appeals Revisits Faragher-Ellerth Defense

In what may be the most legally significant development in the wake of the #MeToo movement, a federal Courts of Appeals has called into question the fundamental policies behind the Faragher-Ellerth defense based on the realities of the workplace as revealed by the #MeToo movement.  The U.S. Supreme Court established the Faragher-Ellerth defense to liability in hostile work environment cases for employers that could demonstrate: 1) they took reasonable steps to prevent the harassment (i.e., it had an anti-harassment policy and procedure and 2) the plaintiff employee unreasonably failed to avail herself of the corrective measure (i.e., complain under the policy). In the 30 years since, employers have routinely obtained summary judgment on this basis, even when the plaintiff claimed that fear of retaliation motivated her silence.

Earlier this year, in vacating a summary judgment in Minarsky v. Susquehanna County, 895 F.3d 303 (3rd Cir. 2018), the Third Circuit Court of Appeals interpreted the Faragher-Ellerth defense in light of the lessons learned from #MeToo. In what may be an oft-cited footnote, the Court stated, “[t]his appeal comes to us in the midst of a national news virtual firestorm of rampant sexual harassment that has been closeted for many years, not reported by victims.” The court continued: “while the policy underlying Faragher-Ellerth places the onus on the harassed employee to report her harasser … there may be a certain fallacy that underlies the notion that reporting sexual misconduct will end it. Victims anticipate negative consequences or fear that the harassers will face no reprimand; thus, more often than not, victims chose not to report the harassment.”  The court found that ”[w]hile an employee’s “generalized and unsupported fear of retaliation is insufficient to explain a long delay in reporting sexual harassment,” the plaintiff had offered several legitimate reasons that a jury could find reasonable: 1) her financial dependency on her job with a sick daughter to care for, 2) her fear of retaliation based on the harasser’s comments and 3) the perceived futility of reporting because the harasser’s comments were known to others.  In the evolving landscape of sexual harassment laws across the country, we will closely monitor whether the Third Circuit’s decision signals a shift in how courts interpret the Faragher-Ellerth defense moving forward.

Preventing sexual harassment remains the best defense and a respectful and inclusive workplace culture is the place to start.  Hogan Lovells’ employment attorneys are well-equipped to help employers take the steps necessary to comply with changes to harassment laws. Learn more about our Contemporary Anti-Harassment Training here.

The State of New York recently issued draft guidance for employers regarding the anti-sexual harassment legislation passed earlier this year. As we previously reported, effective October 9, 2018, all New York employers must either adopt or create a policy that equals or exceeds the State’s model policy and training program. On August 23, 2018, the State released its model policy and a set of minimum standards that an employer must meet or exceed if it chooses not to adopt the model policy. A few of the key standards require that an employer’s policy include:

  • Examples of prohibited conduct that would constitute unlawful sexual harassment;
  • A procedure for the timely and confidential investigation of complaints that ensures due process for all parties;
  • A complaint form; and
  • Language that informs employees of their rights and all available forums for adjudicating sexual harassment complaints administratively and judicially.

The State also released its model training script and a set of minimum standards that an employer must meet or exceed if it chooses not to directly follow the model. Notable guidelines require that the training must:

  • Be interactive;
  • Include examples of conduct that would constitute unlawful sexual harassment; and
  • Include information concerning the federal and state statutory provisions concerning sexual harassment and remedies available to victims of sexual harassment.

Additionally, the Frequently Asked Questions section of the State’s guidelines clarifies that to meet the “interactive” element required by the law, a training may: (1) be web-based with questions asked of employees; (2) accommodate questions asked by employees; (3) include a live trainer made available during the training to answer questions; and/or (4) require feedback from employees about the training and materials presented.

The Labor and Employment Team at Hogan Lovells has extensive experience providing interactive anti-harassment training, and developing anti-harassment policies and complaint procedures. For assistance with complying with these new guidelines or for any other employment matter impacting your business, please contact the authors of this article or the attorney you regularly work with at Hogan Lovells.

As we previously reported, New York City Mayor Bill de Blasio signed the “Stop Sexual Harassment in NYC Act” (the “Act”) into law earlier this year.  The New York City Commission on Human Rights (the “NYCCHR”) has now released additional guidance, including the mandatory fact sheet and notice referenced in the Act.

Effective September 6, 2018, all New York City employers must display the anti-sexual harassment notice in a conspicuous location. The notice provides examples of sexual harassment and how to report incidents within an employer’s organization or to the NYCCHR. Additionally, New York City employers must provide the fact sheet to all new hires.  Employers may comply with this requirement by placing the fact sheet in an employee handbook, as long as the handbook is distributed to new hires.

The NYCCHR posted the fact sheet and notice on its new website, which includes additional information on the Act.  As a reminder, beginning on April 1, 2019, New York City employers with at least 15 employees will be required to conduct annual anti-sexual harassment trainings.  These trainings must be “interactive” and explain what sexual harassment is, along with the process of reporting complaints internally and to the respective federal, state, and city administrative agencies.

The Labor and Employment Team at Hogan Lovells has extensive experience providing interactive anti-harassment training, developing anti-harassment policies and complaint procedures, and guiding companies on the best practices for complying with federal and state labor and employment laws. We will continue to keep you updated on the latest developments concerning recent legislation introduced to address sexual harassment in the workplace.

For more information or for any other employment matter impacting your business, please contact the authors of this article or the attorney you regularly work with at Hogan Lovells.

Maryland recently enacted the Disclosing Sexual Harassment in the Workplace Act of 2018 (the “Act”) with an effective date of October 1, 2018. The Act places two types of obligations on Maryland employers. First, Maryland employers with at least 50 employees will be required to submit survey responses to the Maryland Commission on Civil Rights (“MCCR”) with the following data by July 1, 2020 and again by July 1, 2022: (1) the number of settlements made by or on behalf of the employer after an allegation of sexual harassment by an employee; (2) the number of times the employer has paid a settlement to resolve a sexual harassment allegation against the same employee over the past 10 years of employment (and whether the employer took personnel action against said employee); and (3) the number of settlements made after an allegation of sexual harassment that included a provision requiring both parties to keep the terms of the settlement confidential.

The Act directs the MCCR to publish aggregate employer survey data on its website and allow public inspection of certain data upon request. The MCCR will report employer responses to the Governor and select committees, but the Act is silent on how they will in turn use the information. This section of the Act requiring employers to report data will automatically expire on June 30, 2023.

Second, all Maryland employers, regardless of size, are prohibited from including in an employment agreement, contract, or policy, any provision that waives an employee’s substantive or procedural rights or remedies to a claim that accrues in the future for sexual harassment or retaliation for reporting sexual harassment. An employer may not take adverse action against employees for refusing to agree to a prohibited waiver, and employers will be liable to employees for reasonable attorney’s fees and costs if they enforce or attempt to enforce a prohibited waiver. The Act provides that this first obligation applies “except as prohibited by federal law,” and the effect, if any, of the new law on arbitration agreements will need to be determined.

To prepare for October 1, employers should review employment agreements and relevant policies to ensure they do not contain a waiver of substantive or procedural rights or remedies regarding future-accruing claims of sexual harassment or retaliation for reporting sexual harassment.  Additionally, Maryland employers covered under the Act’s reporting obligations will need to be prepared by 2020 to complete the mandatory survey.

As we previously reported, Congress and several states have responded to the #MeToo movement by introducing legislation that addresses sexual harassment in the workplace.

For more information or for any other employment matter impacting your business, please contact the authors of this article or the attorney you regularly work with at Hogan Lovells.

Over the past several weeks, New York has gotten serious in its attempt to end sexual harassment. Earlier this month, Mayor Bill de Blasio signed the “Stop Sexual Harassment in NYC Act” (“New York City Act” or “Act”) into law, bringing about sweeping changes that will affect all New York City employers.

  • Specifically and effective immediately, the New York City Human Rights Law (“NYCHRL”) will consider sexual harassment to be a distinct form of discrimination, and will cover all employers, regardless of the number of employees, with respect to claims of sexual harassment. Further, the Act increases the statute of limitations for gender-based harassment to three years. Previously, the NYCHRL only applied to employers with four or more employees and had a statute of limitations for gender-based harassment of only one year.
  • Effective September 6, 2018, all New York City employers will be required to display a new anti-sexual harassment poster in a conspicuous location, which will be created by the NYC Commission on Human Rights. The poster will define sexual harassment and how to report it. It must be displayed in both English and Spanish.
  • On April 1, 2019, New York City employers with 15 or more employees will be required to conduct annual sexual harassment trainings. These trainings must be “interactive” and explain what sexual harassment is, along with the process of reporting complaints internally and to the respective federal, state and city administrative agencies. Employers must keep records verifying that employees have completed the training.

The Act was enacted on the heels of New York State-wide legislation signed into law by Governor Andrew Cuomo in April. Some of the highlights of the new State-wide laws include:

  • Effective immediately, the New York State Executive law is amended to impose liability upon all employers for gender-based harassment experienced by non-employees, such as contractors, vendors, or consultants.
  • Effective July 11, 2018, New York employers are prohibited from including a non-disclosure agreement in any settlement of a sexual harassment claim unless the complainant specifically requests confidentiality.
  • Effective July 11, 2018, New York employers are prohibited from including mandatory arbitration provisions for allegations or claims of sexual harassment “except where inconsistent with federal law.”
  • Effective October 9, 2018, all New York employers must either adopt or create a policy that equals or exceeds the model policy and training program which will be developed by the New York Department of Labor in collaboration with the Division of Human Rights.

In light of these new laws, New York employers should: (a) review and revise as necessary their sexual harassment training policies and practices to ensure compliance with City and State laws; (b) as soon as the anti-sexual harassment posters become available, New York City employers should be prepared to post the posters in a conspicuous setting in the workplace; (c) review their standard settlement agreements to make sure that they are in compliance with New York’s new laws on the prohibition of non-disclosure agreements in harassment-based settlements; and (d) assess any mandatory arbitration provisions in their contracts or policies to comply with these new laws. This aspect of the law will likely be challenged in court and could take several years before a final conclusion is reached, but companies would be wise to consider the potential impact that the law has on pre-existing and future agreements.

The Labor and Employment Team at Hogan Lovells has extensive experience providing interactive anti-harassment training, developing anti-harassment policies and complaint procedures, and guiding companies on the best practices for complying with Federal and State labor and employment laws.

 

 

Employers and employees entering into separation or settlement agreements have traditionally agreed to nondisclosure clauses that prohibit disclosure of the agreement or the circumstances leading to its execution. Although these clauses have not previously been subject to much controversy and considered to provide valuable closure for employer and employee, the #MeToo movement has generated much criticism of such clauses when related to allegations of sexual harassment, arguing they have the detrimental effects of silencing victims and enabling repeat offenders.  This criticism has led to new trends in the law which discourage such nondisclosure clauses and agreements.

The most significant change so far is in federal tax law, which has created a disincentive to nondisclosure provisions in settlements of sexual harassment or abuse claims. Specifically, Congress’s recently enacted Tax Cuts and Jobs Act prohibits employers from deducting as a business expense (under Internal Revenue Code Section 162)  “(1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or (2) attorney’s fees related to such a settlement or payment.”

At the state level so far, California, New Jersey, New York, Pennsylvania and Washington have introduced legislation aimed at curtailing the use of nondisclosure provisions that restrict discussions or disclosure of workplace sex harassment. Each state proposal has its own specifics, but in general they render invalid the use or enforcement of non-disclosure provisions related to sexual harassment, either as part of any nondisclosure agreement, or in the context of settlement agreements, or both.  As of the date of this article, legislation is still pending in California, New York, and Pennsylvania, and New Jersey’s bill did not pass in the state’s last legislative session.  Washington’s bill was enacted into law on March 21, 2018 with an effective date of June 7, 2018 and covers nondisclosure agreements entered into as a condition of employment, but permits confidentiality provisions in settlement agreements.  The text of the Washington law can be found here.

Employers should stay up to date concerning applicable laws in connection with nondisclosure agreements. And when nondisclosure agreements exist, employers should remember that they may not interfere with an employee’s right to file a charge with or communicate with U.S. Equal Employment Opportunity Commission (“EEOC”).  Although a settlement agreement can bar an individual from seeking monetary or other individual relief at the EEOC, courts and the EEOC have invalidated agreement terms that interfere with an individual’s nonwaivable right as a matter of public policy to file a charge or otherwise communicate with the EEOC.

For more information or for any other employment matter impacting your business, please contact the authors of this article or the attorney you regularly work with at Hogan Lovells.

 

Hogan Lovells invites you to a panel discussion focused on best practices for addressing workplace sexual harassment allegations.

Most companies have anti-harassment policies, but do employees and managers know what these policies really mean? Are these policies enforced consistently across the organization? What are the employer’s obligations when the allegation involves a high-ranking manager or executive? And what if the allegations are true?

Join our labor & employment and internal investigation attorneys as they answer these and other thorny questions on this important topic. In addition, our panelists will discuss the following:

    • When to, how to, and who should conduct an internal investigation
    • Legal liability and other consequences for both the company and the harasser, including the potential impact on separation, settlement and non-disclosure agreements
    • Public relations considerations and the impact of social media in the current climate of harassment
    • International implications, including complications relating to foreign employees and U.S. employees abroad

The panel will take place on March 22, 2018 from 5:00 – 6:00 p.m. in the Hogan Lovells’ New York office. Registration begins at 4:30 p.m. CLE credit is pending. A reception with light food and refreshments will follow the discussion.

Kindly RSVP here.

We look forward to hosting you.

Agenda
4:30 p.m. – 5:00 p.m. Registration
5:00 p.m. – 6:00 p.m. Panel Discussion
6:00 p.m. – 7:00 p.m. Reception

Contact

Matthew Rimi
matthew.rimi@hoganlovells.com