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#MeToo Round 2 - Sweeping Legislation Transforms New York Employment Landscape Yet Again

August 15, 2019

#MeToo Round 2 - Sweeping Legislation Transforms New York Employment Landscape Yet Again

August 15, 2019

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The new laws will require employers to overhaul many of their existing policies, forms, agreements and handbooks.  

Note: This Alert has been updated following the signing of Senate Bill S6577 into law.

On Monday, August 12, 2019, New York Governor Andrew M. Cuomo signed sweeping new legislation designed to strengthen discrimination and sexual harassment protections in the workplace. Those protections include: expanding statutory coverage; lowering the standard for establishing harassment and discrimination; permitting additional damage recovery; imposing restrictions in the use of nondisclosure agreements; barring mandatory arbitration of discrimination and retaliation claims; broadening the scope of the powers of the Attorney General’s Office; and requiring additional responsibilities related to sexual harassment trainings and policies. Some sections of the law became effective immediately on August 12, 2019, while other provisions take effect on varying dates.

The new laws—further aftermath of the #MeToo movement—will build upon the New York State Budget Bill for Fiscal Year 2019 and last year’s comprehensive sexual harassment reform, making New York’s laws arguably the most robust employee protections in the country.

Enhanced Discrimination and Sexual Harassment Laws

Senate Bill S6577 makes a number of changes, including:

Expanding Statutory Coverage

  1. The New York State Human Rights Law (NYSHRL) governs New York employers of all sizes (effective February 8, 2020). Previously, the law governed only employers with four or more employees, except for sexual discrimination provisions, for which all employers are covered.
  2. Domestic workers and independent contractors are protected from all forms of harassment (effective October 11, 2019), as opposed to just sexual harassment, as the law previously provided. This change conforms state law with the Budget Bill’s previous amendments and with the New York City Human Rights Law (NYCHRL) standards already in place.
  3. The new legislation extends the statute of limitations from one year to three years for NYSHRL sexual harassment complaints in filings before the New York State Division of Human Rights, similar to what was put in place for sexual harassment complaints in the Budget Bill (effective August 12, 2020). This brings the state in-line with the NYCHRL statute of limitations, and in-line with what plaintiffs have always been able to do in court. All other discrimination claims will still be subject to the one-year statute of limitations before administrative agencies.

Lowering Standard for Establishing Harassment and Discrimination

  1. The law eliminates the “severe or pervasive” standard previously used to determine whether harassing conduct arose to the level of discrimination, which is akin to the NYCHRL (effective October 11, 2019). Harassment will now be an “unlawful discriminatory practice when it subjects an individual to inferior terms, conditions, or privileges of employment because of the individual’s membership in one or more of these protected categories.” The law does provide employers with an affirmative defense when “the harassing conduct does not rise above the level of what a reasonable victim of discrimination with the same protected characteristic would consider petty slights or trivial inconveniences.” (Emphasis added.) This substantially conforms state law to the NYCHRL’s “less well” standard.
  2. The law also eliminates the Faragher-Ellerth defense for liability purposes, meaning that the fact that an individual did not make a complaint about discriminatory harassment to an employer, licensing agency, employment agency or labor organization will not be determinative of liability, likewise akin to the rules under the NYCHRL (effective October 11, 2019).
  3. The law eliminates any requirement that employees identify a comparator, or an employee outside of the claimant’s protected category, to establish discrimination (effective October 11, 2019).
  4. Courts are required to interpret the NYSHRL liberally, regardless of how comparable federal provisions are construed, as is the case with the NYCHRL (effective immediately on August 12, 2019).

Permitting Additional Damage Recovery, Effective October 11, 2019

  1. Employers now face the possibility of punitive damages for any NYSHRL claim (same as the NYCHRL).
  2. The prevailing party “shall” be awarded attorneys’ fees in all claims of employment discrimination, whereas attorneys’ fees were previously discretionary in cases of sexual harassment in employment. A prevailing employer still must show that the employee’s action was frivolous.

Restrictions in the Use of Nondisclosure Agreements

  1. The law bars nondisclosure agreements from prohibiting the disclosure of underlying facts and circumstances to any discrimination, harassment, retaliation or failure to accommodate claim or action unless:
    1. Confidentiality is the complainant’s preference;
    2. The complainant is provided with the confidentiality provision in writing in plain English or their primary language;
    3. The complainant has been given 21 days to consider the confidentiality provision, after which, if it is the complainant’s preference, such preference must be memorialized in an agreement signed by all parties; and
    4. The complainant is given seven days in which to revoke the agreement (effective October 11, 2019).
  2. While the scope of the nondisclosure language is less than clear, employers still may be able to keep terms and conditions of a settlement agreement confidential without providing 21 days’ notice and seven days to revoke, so long as the employer makes clear that the nondisclosure provision does not apply to the underlying facts or circumstances that gave rise to the claim, i.e., what wrong or alleged wrong led to the settlement. The lack of clarity on this issue ultimately will need to be resolved by the courts.
  3. If an employment contract contains a nondisclosure agreement, the contract must contain an exception providing that the employee or future employee is not prohibited from speaking with law enforcement, the Equal Employment Opportunity Commission, the state Division on Human Rights, a local commission on human rights or an attorney retained by the employee or potential employee (effective January 1, 2020).

This law expands the Budget Bill nondisclosure agreement protections and applies them more broadly to protected categories other than sexual harassment.

Eliminating Arbitration, Effective October 11, 2019

The new law bars mandatory arbitration to resolve any discrimination claims (which likewise now extends the Budget Bill’s prohibition to discrimination claims other than those related to sexual harassment).

On June 26, 2019, however, a federal court in Latif v. Morgan Stanley & Co., found the Budget Bill’s prohibition on mandatory arbitration of sexual harassment claims to be preempted by the Federal Arbitration Act (FAA). A former associate at Morgan Stanley & Co. LLC sued the company in the Southern District of New York, alleging he was the target of inappropriate comments regarding his sexual orientation, inappropriate touching, sexual advances and offensive comments about his religion. He also alleged a female supervisor sexually assaulted him. At the commencement of his employment with Morgan Stanley, the plaintiff signed an offer letter incorporating by reference Morgan Stanley’s arbitration agreement, which required arbitration of, among other things, any statutory discrimination, harassment and retaliation claims. The parties disputed whether the plaintiff’s sexual harassment claims were subject to the arbitration agreement in light of the recent Budget Bill’s prohibition. The court granted Morgan Stanley’s motion to compel arbitration, finding that the Budget Bill’s prohibition was inconsistent with the FAA’s policy favoring the enforcement of arbitration agreements: “When state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA.”

The court’s decision in Latif creates the strong presumption that S6577’s prohibition on mandatory arbitration for all discrimination claims will be preempted by the FAA as well.

Broadening Scope of Attorney General’s Office Powers, Effective Immediately on August 12, 2019

The new law gives the attorney general the power to prosecute and defend employers for civil discrimination claims based on all protected classes. Previously, the attorney general’s powers were limited to prosecuting and defending discrimination claims based on age, race, creed, color and national origin.

Sexual Harassment Trainings and Policies, Effective Immediately on August 12, 2019

  1. The law requires employers to provide employees, at the time of hire and at every annual sexual harassment prevention training, a notice in English and in the employee’s primary language containing the employer’s sexual harassment prevention policy and the information presented at the training program.
  2. The NYSDHR commissioner is required to prepare and make available templates of the model sexual harassment prevention trainings and policies. The Budget Bill required the NYSDHR to make available model policies and trainings, but did not require templates of those policies and trainings to be made available.
  3. The NYSDHR and the New York State Executive Department are required to evaluate and update the model sexual harassment prevention policy and guidance every four years.

The new law requires employers to overhaul many of their existing policies, forms, agreements and handbooks. Every New York severance agreement, employment agreement and handbook will require detailed revisions and review. Employers with fewer than four employees and no existing policies will need to create and implement such policies. Additionally, while the amendments do not explicitly address general discrimination training, in light of these changes, employers, if not doing so already, may want to include comprehensive discrimination trainings while conducting the mandatory sexual harassment trainings.

Expansion of Equal Pay Protections

New York’s equal pay law prohibits employers from paying employees differently based on sex when those employees work in the same establishment performing equal work on a job requiring equal skill, effort and responsibility, performed under similar working conditions. Senate Bill S5248B (effective 90 days after the bill becomes law) expands the law to prohibit such wage differential based on all protected classes, not just based on sex. This amendment grants all protected classes the same level of coverage as gender received under New York’s 2016 Achieve Pay Equity Law.

S5248B further adds that work performed does not just have to be equal—work can be “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.”

The previous exceptions to equal pay protections remain in place, allowing wage differentials when payment is made pursuant to a differential based on a seniority system, a merit system, a system that measures earnings by quality or quantity of production or a bona fide factor other than a protected class, such as education, training or experience.

These changes are akin to the recently enacted Diane B. Allen Equal Pay Act, which significantly expanded pay equity protections in New Jersey in April 2018 to cover all protected classes, as opposed to just gender. The Allen Act was one of the first equal pay laws to afford protection to all protected classes, and as New York follows closely behind, it is likely more cities and states across the country will do the same.

Employers may want to scrutinize their pay systems and consider, at a minimum, implementing measures such as conducting pay audits with the aid of counsel to identify existing pay differences based on protected categories and formulate strategies for compliance; analyzing hiring and compensation practices and taking appropriate steps to document decisions affecting compensation based on the recognized justifications for job-related pay differences; reviewing job descriptions and postings to ensure they accurately reflect duties and responsibilities of positions; and updating training of supervisory staff.

Prohibition on Salary History Inquiries

Senate Bill S6549 (effective 180 days after the bill becomes law) prohibits all employers from:

  1. Relying on an applicant’s wage or salary history in determining whether to offer employment or in determining the wages or salary for the applicant.
  2. Seeking, requesting or requiring wage or salary history from an applicant or current employee as a condition of interviewing or of continuing to be considered for an offer of employment, or as a condition of employment or promotion.
  3. Seeking, requesting or requiring wage or salary history from sources such as former employers and employees.

The law also prohibits employers from retaliating against applicants or employees for refusing to provide wage or salary history or for filing a complaint alleging a violation of the law.

Applicants and employees may, voluntarily and without prompting, disclose or verify wage or salary history for purposes such as negotiating wages or salary. The law does not expressly contain restrictions on how an employer may use salary history information that is voluntarily disclosed. However, the law does expressly allow employers to confirm wage or salary history only if at the time the employer makes an offer of employment with compensation, the applicant or employee responds to the offer by providing prior wage or salary information to support negotiations.

New York City became the first jurisdiction to pass a salary history inquiry ban in January 2017, and many other jurisdictions—such as California, Delaware, Chicago, Massachusetts, Washington state and more—have since followed suit. Some bans apply only to public employers, while others apply to private employers as well. At least two states, Michigan and Wisconsin, have so-called reverse bans, which prohibit localities in those states from enacting a salary history inquiry ban. Of the states with bans, there are a number of different variables among the laws, including which employers are covered; to whom the laws apply; the geographic scope of the ban; how wages are defined; what constitutes voluntary disclosure; and so forth.

Employers who rely on applicants’ and employees’ salary or wage history when evaluating applicants for employment or determining compensation will need to revisit their approach in this regard. To minimize the risk of noncompliance, employers should review their application forms and interview processes, train employees who interview, hire, promote or determine compensation regarding the law’s requirements, and confirm that third-party recruiters are aware of and commit to complying with the law’s restrictions.

For More Information

If you have any questions about this Alert, please contact Eve I. Klein, Jonathan A. Segal, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.