Don’t underestimate the power of a budget. On April 12, 2018, Gov. Andrew Cuomo signed the FY 2019 state budget, which amended and created numerous state laws designed to strengthen New York’s existing sexual-harassment laws and prevent sexual harassment in the workplace. These new laws impose additional obligations on employers in both the public and private sectors. Some of these changes, while well intended, may have little actual impact. Nonetheless, employers must be aware of both new changes that have already taken effect and others that will become operative by the start of next year. 

Effective April 12, 2018, all New York employers became liable for the sexual harassment of certain non-employees who provide services, such as contractors, subcontractors, vendors, and consultants. Additionally, New York State and local-government employees can be held personally liable for their proportional share of any final money judgment for their intentional wrongdoing with regard to a sexual-harassment claim. 

Other provisions of the new legislation may influence the way New York employers draft employment contracts and settlement agreements. Many employers require employees to sign a mandatory arbitration agreement as a condition of employment. Such a provision requires employees to pursue nearly all legal claims against the employer, with few exceptions, in arbitration rather than in state or federal court. This approach can benefit both parties, and is often preferred as a more efficient and private way to resolve disputes as compared to traditional litigation. But employee advocates argue that arbitration is an oppressive tool used by employers to limit their costs and potential exposure. 

As of July 11, 2018, mandatory arbitration agreements related to sexual-harassment claims are prohibited by state law, except where inconsistent with federal law. This limitation may be hollow, however, because New York courts have made clear that the Federal Arbitration Act authorizes at least private-sector employers to use mandatory arbitration provisions, and the act preempts state law. Further, this change has no impact on unionized employees, as a mandatory arbitration clause in a collective-bargaining agreement remains permissible. While the true worth of this change is unclear, it’s certain that challenges related to arbitration clauses will be litigated in the courts. 

Changes to the law also restrict the use of nondisclosure agreements (NDAs) in settlements related to sexual-harassment claims effective July 11. NDAs are commonly used in the settlement of a lawsuit to preclude the plaintiff from disclosing how much money he/she was paid and, in some cases, to prohibit disclosure of a plaintiff’s factual allegations related to a lawsuit. Now, state law prohibits the use of NDAs in sexual-harassment settlements, as to the factual allegations only, unless the plaintiff prefers a confidential settlement, in which case he/she must be given at least 21 days to consider the NDA before accepting its terms and seven days to revoke acceptance of the NDA after signing it. This change may look familiar to some employers, as it mirrors the procedure currently mandated by the federal Age Discrimination in Employment Act, regarding the settlement of federal age-discrimination claims. It may have limited impact, however, as a plaintiff’s allegations are often already contained in a publicly filed complaint before a case is settled, and employers may still use NDAs to prevent private-sector employees from disclosing how much they were paid to settle a sexual-harassment claim. Regarding public-sector employers in New York, settlement agreements are generally subject to disclosure under the New York Freedom of Information Law (FOIL) with only limited redactions permitted. 

For employers, perhaps the most important changes take effect on Oct. 9, 2018, when all employers — regardless of size — will be required to distribute a written sexual-harassment policy to all employees that meets or exceeds state standards. Employers must then redistribute their written sexual-harassment policy to every employee each year thereafter. 

The New York State Department of Labor (NYSDOL) and the New York State Division of Human Rights (NYSDHR) must collaborate to develop a model sexual-harassment policy for employers. Employers must either adopt the model policy or develop a substantially similar policy that provides employees with at least the same amount of information and protection. On Aug. 23, 2018, a draft model policy was published on New York State’s official website at: www.ny.gov. Any member of the public may submit comments regarding the draft policy through Sept. 12, 2018. The NYSDOL and NYSDHR will consider all public comments in deciding whether to make any changes before publishing a final version. 

At a minimum, the model sexual-harassment policy must include: 

•  A statement prohibiting sexual harassment; 

• Examples of prohibited conduct that constitute sexual harassment; 

• Information regarding federal and state statutes involving sexual harassment and remedies available to survivors of sexual harassment, including a statement that there may be other applicable sexual-harassment laws; 

•  A standard complaint form; 

• The process for both confidential and timely investigations of sexual-harassment complaints; 

•  A statement explaining employees’ rights of redress and the available forums for resolving sexual-harassment claims; 

•  A statement explaining that sexual harassment is a form of employee misconduct and the employer will discipline those who engage in sexual harassment or fail to correct such misconduct; and 

•  A statement that it is illegal to retaliate against an employee who reports sexual harassment or testifies in a proceeding.

Starting Oct. 9, employers must also provide annual sexual-harassment training to all employees. The NYSDOL and NYSDHR are required to create a model training program. A draft model training program was published on Aug. 23, and is also available at New York State’s official website. The draft training material is also subject to public comments through Sept. 12, which the NYSDOL and NYSDHR will consider before publishing a final version. 

Notably the draft training material states that employers should complete sexual-harassment training of all employees by Jan. 1, 2019. It also says new employees should receive training within 30 days of starting employment. But neither of these requirements exist in the new law, which only requires employers to provide training on an annual basis starting Oct. 9.

The draft training material allows training to occur in person, via video or be web-based. But it indicates a preference for web-based training that asks employees questions, accommodates employee questions, includes a live trainer during the session to answer questions and requires feedback from employees about the training and materials presented. Recognizing that some employers may have trouble meeting all these requirements, the draft guidance states that employers should include as many of these preferred training methods as possible. 

While we await the final version of the model training program and regulations, it is clear that the law requires that such training be “interactive” and include at least: 

• An explanation of what constitutes sexual harassment; 

• Examples of prohibited conduct that constitute sexual harassment; 

• Information concerning federal and state statutes involving sexual-harassment and remedies available to survivors of sexual harassment; 

• Information related to supervisor responsibilities and how to address supervisor conduct; and

• Information explaining employees’ rights of redress and the available forums for resolving sexual-harassment claims.

Finally, if you are an employer who bids on work with New York State, there is another change in the law that will soon impact you. Starting on Jan. 1, employers who bid for work with New York State or any New York State public agency or department must certify that they have a written sexual-harassment prevention policy and training program that complies with the new requirements. Any bid that fails to include this certification will be rejected by New York State, unless the bidder establishes valid reasons why it cannot meet the requirements. This law exclusively applies to contracts where competitive bidding is required. If competitive bidding is not required, New York State can use its discretion in determining whether the certification is required for a particular project. 

While some uncertainty surrounds these changes, the most important issue for employers is to ensure they have an adequate sexual-harassment policy in place on or before Oct. 9, and that they are prepared to provide adequate training to all employees. Employers are encouraged to review their existing employment contracts, arbitration agreements, sexual-harassment prevention policies, and training to ensure compliance.  

Robert C. Whitaker, Jr., is a labor & employment partner at the Syracuse–based law firm Hancock Estabrook, LLP. Contact him at rwhitaker@hancocklaw.com.