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Posts Tagged ‘#MeToo’

Sexual Harassment Settlements in New Jersey – Out Of The Dark But Into The Unknown

Posted on: March 28th, 2019

By: Justin Boron

Earlier this month, New Jersey joined the growing group of states that – spurred on by the #MeToo movement – have passed laws regulating settlements of sexual harassment and discrimination claims.

With an asserted purpose of improving transparency and exposing workplace harassment to public view, New Jersey and other states, including California, New York, and Washington,[1] have made confidentiality agreements and non-disclosure agreements unenforceable in sexual harassment cases.[2] Several other states have similar bills pending in their respective legislatures.[3] And Congress similarly has eliminated the tax deduction for settlement of sexual harassment cases when there is a confidentiality clause related to the sexual harassment claims that is included within the settlement agreement.[4] Notably, however, the recent amendment to the New Jersey Law Against Discrimination is broader than many of its counterparts because it encompasses – in addition to sexual harassment claims – claims based on discrimination, retaliation, and harassment involving protected classes beyond sex.

Consistent with the national conversation on this issue, the passage of the New Jersey law invigorated debate about whether the legislation is constitutional, whether it is practicable, and whether it will ultimately achieve the end that it seeks.

At this point, it is simply too early to tell. But the legislation is raising interesting issues to watch as it takes hold in the legal practice across the country.

Is a confidentiality provision important to employers?

NDAs and confidentiality agreements have become part and parcel of almost every settlement agreement. They are so standard that attorneys regularly assume they will be included in a final settlement agreement without ever mentioning them in the negotiations. But the presumption begs the question of how important confidentiality is to an employer in a settlement agreement.

The answer will likely depend on the particular case and the particular employer, but typically employers will insist on a confidentiality agreement so the chatter about the dispute does not live on in the public eye (particularly through social media) even after the matter is resolved. Having said that, confidentiality is probably more important in a particularly bad sexual harassment case against a particularly high-profile employer than in an isolated claim against a mid-sized, single-shop employer. Going forward, counsel should seek input from their client on this issue given that federal law could impact tax treatment of the settlement payment and given that state law might outright prohibit it.

Will plaintiffs actually disclose the settlement and nature of the case?

This question bears on whether the legislation will achieve the transparency that it set out to accomplish. Advocates of the legislation presumably would not want to require an alleged victim to disclose his or her claim involuntarily. Indeed, some of the state laws passed, like New Jersey’s, would allow an employee to keep a settlement confidential if he or she chose to. If prior experience is a guide, many plaintiffs are relieved to have resolved what would be a difficult case involving public testimony about a sensitive subject. In those cases, an express confidentiality agreement might not even be necessary (although typically advisable from a belt and suspenders perspective).

Will it lower the amount that an employer is willing to pay to settle a case?

Again, the data set is not there yet to answer this question. But it is a legitimate concern. If an employer expects to confront continuing publicity about sexual harassment in its workplace even after settlement, particularly for a case where the employer might question the credibility of the allegations, it might be less inclined to pay as much money to resolve a single claim. Another reason would be that a public settlement could invite “copycat” claims, and the initial settlement amount would set a precedent for the value of each claim. This risk would motivate an employer to keep publicly disclosed settlements low to avoid a run of high dollar demands.

Final Takeaway

Generally, we expect employers to view this legislation skeptically, and it will continue to stoke critics of governmental restraints on the freedom of contract. But the silver lining is that the legislation elevates confidentiality agreements from being an after-thought in settlement discussions to a topic that attorneys must discuss with their clients and each other before reaching a final resolution.

If you have any questions or would like more information, please contact Justin Boron at [email protected].

[1] See Rev. Code Wash. (ARCW) § 49.44.210; NY CLS Gen Oblig § 5-336; Cal Code Civ Proc § 1001.
[2] See N.J. Senate Bill 121 at https://legiscan.com/NJ/text/S121/2018.
[3] See https://www.shrm.org/resourcesandtools/hr-topics/behavioral-competencies/global-and-cultural-effectiveness/pages/states-take-action-against-nondisclosure-agreements.aspx.  For a full list of state legislation, see https://www.jdsupra.com/legalnews/the-sexual-harassment-legislation-watch-24212/.
[4] See 26 U.S. Code § 162.

Employers Reconsidering Forced Arbitration in Response to Protest

Posted on: March 4th, 2019

By: Hassan Aburish

In late 2017, the “Me Too” movement ignited after actress Ashley Judd publicly accused media mogul Harvey Weinstein of sexual harassment. Since then, the movement has led to vast changes in the workplace. Numerous industry leaders have fallen from grace. States are quickly passing legislation to attempt to curb sexual harassment and abuse in the workplace, and allegations of sexual harassment continue to rise. However, as Google employees proved last month, compliance with the law cannot be an employer’s only consideration.

When Andy Rubin stepped down from his executive role at Google in October of 2014, it appeared to be an amicable parting of ways. But three years later, a New York Times article revealed that Andy Rubin was forced to resign following a “credible” allegation of sexual harassment. The NYT also disclosed that Google gave Rubin an exit package worth approximately $90 million dollars, which was not required under his contract. Within days of learning this information, hundreds of Google employees staged a walk-out to protest their employer’s handling of alleged sexual misconduct.

In response to employee demands, Google CEO Sundar Pichai agreed not to enforce mandatory arbitration agreements with regard to claims of sexual harassment and assault. However, following their victory, Google employees began pushing for the arbitration clauses to be nixed entirely. On February 21, Google announced the end of its policy of forced arbitration and class action waivers for its employees.

There are many lessons we can learn from Google’s experience. First, never assume that resolution of a dispute will remain confidential. One of the most embarrassing aspects of this situation for Google—and what appears to have been the source of much employee infuriation—was the fact that Google could have terminated Rubin without paying him $90 million for allegations an internal investigation concluded to be credible.

Second, employers must weigh all costs and benefits of their policies regarding employees. While employers typically can require employees who have signed arbitration agreements to pursue their claims within the arbitration context, employers should also assess other factors in deciding how they handle the use of arbitration agreements with their workforce.

Third, sexual harassment continues to be a front-page issue. From giant tech companies to family-owned restaurants, allegations of sexual harassment are likely to make it into the news. So it is now more important than ever to ensure that employers get ahead of these issues by holding consistent harassment training, updating employee policies and manuals, and quickly and appropriately handling employee complaints.

If you have any questions or would like more information, please contact Hassan Aburish at [email protected].

As #MeToo Movement Takes Off, EEOC Sexual Harassment Claims Jump

Posted on: October 11th, 2018

By: Barry Brownstein

Since October 2017, when the Harvey Weinstein scandal broke and the #MeToo movement took off, the U.S. Equal Employment Opportunity Commission has filed 50 percent more sexual harassment lawsuits than it did the previous year and has seen a spike in the number of sexual harassment claims it has received. The EEOC filed 66 harassment lawsuits in fiscal 2018 of which 41 contained allegations of sexual harassment.  In addition, the EEOC recovered about $70 million for sexual harassment victims in fiscal 2018, compared with approximately $47 million it recovered in fiscal 2017.

According to the agency’s data, besides its own stepped up enforcement efforts, workers have also increasingly turned to the EEOC over the past year to report allegations of sexual harassment.  The number of charges filed by individuals alleging they were victims of workplace sexual harassment increased by 12 percent in fiscal 2018 from the prior year. The EEOC fielded 6,696 sexual harassment charges in fiscal 2017. A 12 percent increase of that figure indicates the agency fielded about 7,500 sexual harassment charges in the most recent fiscal year. That increase is the first time this decade the number of sexual harassment charges received by the EEOC has gone up from one fiscal year to the next.

Acting EEOC Chair Victoria Lipnic has ardently communicated the message that the EEOC has continued to lead the way to achieve the goal of reducing the level of harassment and promoting harassment-free workplaces. Consistent with that theme, the EEOC has also issued a report highlighting the various measures it took over the past 12 months to fight all forms of workplace harassment.  Such efforts include more than 1,000 outreach events, the development of “respectful workplaces” training seminars, and the creation of an internal “harassment prevention action team” to coordinate the agency’s anti-harassment efforts.

With sexual harassment claims soaring, employers should review their current training program, update it so it is consistent with the EEOC’s “respectful workplaces” training, and ensure all employees are provided with such training.

If you have any questions or would like more information, please contact Barry Brownstein at [email protected].

New York Passes Sexual Harassment Laws and Issues Employer Guidance

Posted on: September 11th, 2018

By: Will Collins

By October 9, 2018, New York employers must adopt a sexual harassment prevention policy and must provide training on that policy to all employees by January 1, 2019. Last week, New York launched a website that will serve as a hub for all resources related to the state’s new sexual harassment laws. The site contains key guidance setting the baseline for employer compliance. Among the resources, the website provides employers with a:

  • Model Sexual Harassment Policy & Complaint Form;
  • Model Sexual Harassment Prevention Training; and
  • FAQs section addressing the requirements of New York’s sexual harassment laws.

At this point, all guidance on the site is only proposed and subject to change following the close of the public comment period on September 12, 2018. Once final, the model policies and training may be adopted by employers as their own.

Model Sexual Harassment Policy and Complaint Form

At a minimum an employer must adopt a sexual harassment policy that meets or exceeds the standards set by the New York Department of Labor.  The Model Policy expounds on those requirements and:

  • Contains a broad statement of coverage, including “all employees, applicants for employment, interns, whether paid or unpaid, contractors and person conducting business with” an employer;
  • Requires “[a]ll employees, including managers and supervisors,” comply and cooperate with any investigation of sexual harassment;
  • Mandates that any manager or supervisor is “required to report any complaint that they receive, or any harassment they observe” to a designated individual;
  • Outlines the investigation procedure, indicating that the investigation should be complete within 30 days;
  • Contains a document retention component, requiring that an employer maintain documentation memorializing the details of the investigation, including the timeline, facts learned during the investigation, and any witnesses; and
  • Requires that the employer notify the complainant of the employer’s determination at the end of the investigation, including notification of the complainant’s right to file a complaint or charge externally.

Model Sexual Harassment Prevention Training

Employers must provide training to all employees by January 1, 2019. After January 1, 2019, employees must receive training on the employer’s sexual harassment policy annually and new employees must receive training within the first 30 days of their employment. The Model Training guidance:

  • Provides that all employees who work in the state of New York must receive training, even if the employee “works for just one day in New York;”
  • Requires that training be offered in the spoken language of employee; and
  • Tracks the Model Policy language, but contains details of specific examples of conduct illustrative of sexual harassment.

Again, employers do not have to use the training and materials provided by the New York Department of Labor. However, if developing their own training, employers must meet the minimum requirements.

FAQs Section

Among several key topics in the FAQs, this section of the website provides guidance on non-disclosure agreements and arbitration.

  • Non-Disclosure: Beginning July 11, 2018, the law prohibits agreements preventing the disclosure of facts of any alleged sexual harassment unless the NDA is the preference of the individual making the Complaint. The FAQs clarify that the parties must enter into two separate agreements—one setting out the complainant’s preference and a second containing the non-disclosure provisions.
  • Arbitration: The FAQs again reiterate that the law prohibits employers from mandating arbitration to “resolve any allegation or claim of an unlawful discriminatory practice of sexual harassment.”

Bottom Line

These are just a few of the developments in New York’s sweeping response to the #MeToo movement, pushing employers to adopt robust and comprehensive sexual harassment policies and training. Given the broad coverage of the requirements and the fast approaching deadlines, employers should take this opportunity to work with counsel to review their policies, including provisions of their handbook and any arbitration agreements to ensure compliance.

The attorneys in the FMG Labor and Employment Nation Practice Section are available to assist your organization, determine your obligations under New York law, and help you navigate day-to-day compliance as other states, counties, and cities enact similar regulations.

If you have any questions or would like more information, please contact Will Collins at [email protected].

California Attacks Arbitration Agreements …. Yet Again!

Posted on: August 24th, 2018

By: Dave Daniels

On August 22, 2018, the California Senate voted to approve AB 3080, a bill prompted by the #MeToo movement against sexual harassment. Nominally, the bill is intended to combat the use of mandatory arbitration agreements and confidentiality clauses to prevent the public disclosure of workplace sexual harassment, a practice vigorously opposed by the #MeToo movement. As written, however, AB 3080 goes much further, imposing a ban on mandatory arbitration agreements for all claims of employment discrimination, retaliation, and harassment, as well as wage and hour claims.

The bill is currently on Governor Jerry Brown’s desk, awaiting his signature or veto. If signed, the new law would apply to any employment contracts “entered into, modified, or extended” on or after January 1, 2019, and would make several sweeping changes to the California employment law landscape:

Ban on Mandatory Arbitration Agreements

Arbitration agreements are ubiquitous in employment contracts and provide for a low-cost, efficient means of resolving employment disputes.

AB 3080 would put a stop to this by adding Section 432.6 to the Labor Code, which would prohibit any person from requiring an applicant or employee, “as a condition of employment, continued employment, the receipt of any employment-related benefit, or as a condition of entering into a contractual agreement,” “to waive any right, forum, or procedure” for claimed violations of the California Fair Employment and Housing Act (“FEHA”) or the California Labor Code.

In other words, if AB 3080 is signed, it will be unlawful—indeed a misdemeanor—for an employer to require its employees to enter into mandatory arbitration agreements for any claims covered by FEHA (i.e., discrimination, retaliation, harassment) or the Labor Code (i.e., wage and hour claims).

While the bill only applies to mandatory arbitration agreements, Section 432.6(c) makes clear that employers will not be able to sidestep the new prohibitions by using opt-out clauses or otherwise requiring an employee to “take any affirmative action to preserve their rights.”  Moreover, Section 432.6(b) prohibits employers from threatening, terminating, retaliating against, or discriminating against any employee or applicant who refuses to voluntarily sign an arbitration agreement.

Finally, because these new provisions appear in the Labor Code, violations could subject employers to civil penalties under the California Labor Code Private Attorneys General Act, also known as PAGA.

Elimination of Settlement Agreements

Because AB 3080 prohibits any person from requiring an applicant or employee “to waive any right, forum or procedure” “as a condition of entering into a contractual agreement,” it arguably also eliminates or curtails employers’ ability to enter into settlement and general release agreements with their employees for FEHA and Labor Code claims.  Given that the vast majority of these types of claims are settled, the full extent of AB 3080’s impact remains uncertain.

Ban on Confidentiality Agreements for Sexual Harassment

AB 3080 would also add Section 432.4 to the Labor Code, which would bar any person from prohibiting an applicant, employee, or independent contractor, “as a condition of employment, continued employment, the receipt of any employment-related benefit, or as a condition of entering into a contractual agreement,” from “disclosing to any person an instance of sexual harassment that the employee or independent contractor suffers, witnesses, or discovers in the workplace or in the performance of the contract.”

In short, employers will no longer be able to impose confidentiality obligations on their employees or independent contractors with respect to claims of sexual harassment.

Individual Liability

Importantly, AB 3080 applies to any “person” who commits any of the above-noted violations, not just an employer.  An earlier version of the bill was restricted to “an employer,” but was subsequently amended to replace “an employer” with “a person,” signaling the Legislature’s intent to impose individual liability for violations.

What Employers Should Know Now

For the moment, as it awaits Governor Brown’s signature, AB 3080 is still not the law.  In 2015, Governor Brown vetoed a similar bill, AB 465, which would have outlawed the use of mandatory arbitration agreements as a condition of employment.  In his veto message, Governor Brown noted that there is significant debate about whether arbitration is less fair to employees, and explained that he was “not prepared to take the far-reaching step proposed by this bill.”  Remember, however, that Governor Brown’s term ends in January 2019, and a re-introduced version of the bill could find a more sympathetic audience in his successor.

Even if Governor Brown signs the bill, there will be immediate legal challenges arguing that the bill is unenforceable under the Federal Arbitration Act, which the United States Supreme Court has steadfastly enforced, most recently in Epic Systems Corp. v. Lewis. AB 3080 is just the latest in a long history of California’s antagonism towards arbitration agreements, both in the employment context and beyond.

Notwithstanding the hurdles that AB 3080 faces, employers should now begin reviewing their arbitration agreements and practices in light of these potential changes.  In particular, employers will want to think about best approaches to take during the period after the bill is signed and legal challenges work their way through the courts.

If you have any questions regarding the state of arbitration agreements in the Golden State, please feel free to contact Dave Daniels in our Sacramento office at 916-472-3301 or [email protected].