On June 19, 2019, the New York State Senate passed Bill S6577 (“Senate Bill 6577”). It expands employment harassment and discrimination laws and will have broad implications on New York employers. The first changes go into effect 60 days after enactment.

Modification of Defenses and Standards for Employment Discrimination Claims

Senate Bill 6577 eliminates the Faragher-Ellerth defense. This defense gave employers the opportunity to remedy claims of discrimination or harassment by requiring employees to follow internal complaint procedures. Employees will no longer need to exhaust internal procedures for harassment or discrimination claims and may directly sue their employer.

Instead of the Faragher-Ellerth defense, Senate Bill 6577 provides a more subjective defense. Employers can claim that the purported harassment or discrimination “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.” The addition of a “reasonable victim” standard provides courts with the discretionary authority over an employer’s affirmative defense. Moreover, courts are given discretion to determine what is considered a “petty slight or trivial inconvenience.”

Senate Bill 6577 also replaces the “severe and pervasive” standard that employees had to meet in order to prevail on a harassment or discrimination claim. It provides an imprecise standard where employees may prevail on a claim by showing that they were subjected to “inferior terms, conditions, or privileges” due to their membership in a protected class. However, it fails to clarify what constitutes “inferior” employment terms and conditions. It also no longer requires claimants to compare their treatment to a similarly situated employee to prevail.

Impact on Arbitration Agreements

Senate Bill 6577 prohibits clauses in contracts that require parties to submit to mandatory arbitration. It also prohibits provisions which provide that any facts or determinations made by an arbitrator or arbitration panel are final and “not subject to court review.” However, this provision may be preempted by the Federal Arbitration Act (the “FAA”).

Expansion of Remedies Available for Claimants

Senate Bill 6577 makes employers liable for punitive damages and reasonable attorney fees to prevailing claimants of discrimination and harassment claims.

Impact on Non-Disclosure and Settlement Agreements

Senate Bill 6577 adopts prohibitions against non-disclosure and settlement agreements in the workplace:

  1. Employers cannot prohibit the disclosure of the underlying facts or circumstances of a claim in any agreement between an employer and employee unless the employee claimant prefers to keep such information confidential.

  2. Any confidentiality terms or conditions in disclosure and/or settlement agreements from either the employer or the claimant must be provided in writing to all parties in both plain English and the claimant’s primary language.

  3. Senate Bill 6577 prohibits any provisions in any contracts or agreements between an employer and an employee (or potential employee) which prohibit the disclosure of facts relating to future discrimination claims. Such provisions are void and unenforceable unless the contract notifies the employee that they are not prohibited from speaking with law enforcement and/or their attorney.

Extension of the Statute of Limitations for Sexual Harassment Claims

Senate Bill 6577 extends the statute of limitations for sexual harassment claims to three years. This change will go into effect 1 year after the bill is enacted.

Mandatory Notices of Sexual Harassment Prevention Policies

Senate Bill 6577 requires employers to provide their employees with notices containing sexual harassment prevention policies and any information presented at mandatory annual sexual harassment training programs. These notices must be in plain English, the primary language of each employee and provided at the time of hiring and/or at annual trainings. 

The commissioner of labor will provide templates of model sexual harassment policies and annual prevention training programs in English and any other language the commissioner deems necessary.

The Bottom Line

Senate Bill 6577 makes three key changes that negatively affect employers. The elimination of the Farageher-Ellerth defense to a more subjective standard may create problems for employers. The new defense may be susceptible to unfavorable interpretation from courts. Likewise, the prohibition of mandatory arbitration clause will create problems for employers. However, this prohibition may be preempted by the FAA. Finally, employers are now subject to punitive damages and attorneys’ fees from prevailing claimants.

The authors would like to thank Amrit Singh for his hard work and contributions to this client alert.

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