Vladislav Shafran

The #MeToo movement, inspired by the Harvey Weinstein controversy which erupted in October 2017, has implications far beyond the media and entertainment industry. Legislatures across the country were quick to respond, with a variety of laws seeking to protect victims of sexual harassment. The New York legislature has spearheaded this legal movement through the passage of several bills imposing new constraints and obligations on employers.In this new legal trend, New York may serve as an example for other states to look to: a system which reinforces employees’ protections, limits employers’ ability to hide allegations of sexual harassment, and sets a standard for employers to adhere by.

Prohibiting Mandatory Arbitration

In a widely publicized story, Gretchen Carlson sued Roger Alias of Fox News in 2016 for sexual-harassment. However, Fox News had a mandatory arbitration agreement with the majority of their employees. These contracts mandated that any employer dispute would be resolved outside the eyes of the public, in front of an arbitrator. Gretchen circumvented the mandatory arbitration contract initially by suing Roger Alias personally. Shortly after, a wave of similar lawsuits against Alias made it apparent that mandatory arbitration prevented many previous victims from disclosing the illegal conduct happening at Fox. Such information could have prevented similar future conduct from ever taking place.

New York responded to this concern with the passage of N.Y.C.P.L.R. 7515, which prohibits a contract that requires mandatory arbitration “to resolve any allegation or claim of an unlawful discriminatory practice of sexual harassment.” New York state employers are now unable to force mandatory arbitration in this context.

There is concern that the Supreme Court’s stance on the Federal Arbitration Act (FAA) may preempt this legislation. However, it clearly sets out the New York legislature’s stance on this question and will undoubtedly deter employers from attempting to enforce such provisions. As victims will now be able to sue in open court, there will be more transparency and information to warn prospective employees. In turn, this can incentivize employers to reduce the likelihood of such conduct taking place.

Limiting Confidentiality Clauses

The Harvey Weinstein controversy exposed the dangers of confidentiality clauses in settlement agreements. Past victims were barred from speaking out or warning the public. This allowed Mr. Weinstein to continuously repeat his conduct with new, unwitting employees.

The New York State Budget Bill for Fiscal Year 2019 delivered General Obligations Law §5-336, a statute which prohibits settlement agreements that prevent parties from disclosing or discussing the facts underlying sexual harassment claims. An employer may only include such a confidentiality clause in the agreement with the consent of the settling individual. This law puts an emphasis on the complainant’s preference. There is a possibility that the statute might incentivize employers to enter into litigation instead of settlement, as they do not receive the confidentiality benefit of the settlement anymore. However, it will likely increase the chances of greater transparency to the public and could cause the employer a substantial amount of reputational damage, promoting more stringent anti-sexual-harassment policies on part of the employer.

Requiring Training and Policy

The newly enacted New York Labor Law § 201-g required the New York State Department of Labor (NYSDOL) to create a model sexual harassment prevention policy.  Employers must adopt this model or use it in establishing their own policies. If an employer chooses the latter option, that policy must meet or exceed the standards established by the NYSDOL. The law also requires employers to conduct annual trainings for all employees.  Some of the requirements of the law include that employers explain sexual harassment as a form of unlawful discrimination under the law, describe what sexual harassment means, and develop an internal complaint process available to employees.

Through these sweeping changes to the law, New York exemplifies a robust start to effective legislation on the matter. The laws serve to promote transparency of sexual-harassment claims committed by an employer, while increasing reputational and litigation costs of such claims on the side of the employer. Setting up a system which incentivizes employers to lower the risk of such conduct, New York then proceeds to provide employers with a model policy to implement at the work-place which could affect such a change. Such sweeping changes in the law also institutionalize and reinforce the importance of tackling this problem.

As these laws have only recently been passed, it will take time to analyze their effects. Several obstacles could implicate these changes, such as preemption by the FAA and the possibility that employers could induce victims to ‘prefer’ confidentiality clauses by lowering the settlement amount if the victim does not agree. Furthermore, there is a likely chance that litigation will ensue concerning the definition of “sexual harassment” in these new laws, as the legislation does not specifically define that term. However, as an initial starting point on tackling a substantial problem, more states, and even the Congress, could look to New York’s efforts for guidance.