In the wake of the #MeToo movement, a number of states are considering legislation that would limit an employer’s ability to use non-disclosure agreements (“NDAs”) when settling sexual harassment claims. New York was the first state to enact such legislation, which was passed as part of a wide-ranging budget bill that takes effect July 11, 2018. New York’s law bans non-disclosure provisions in settlements of claims involving sexual harassment allegations, unless confidentiality is the “complainant’s preference,” provided some onerous procedures are complied with. Washington State passed a similar law. Arizona, California, and Pennsylvania are also considering legislation to restrict the use of NDAs.
On April 11, 2018, the New York City Council passed a package of legislation referred to as the “Stop Sexual Harassment in NYC Act,” (“NYC Act”) which, if passed, will require covered New York City employers to, among other things, provide annual anti-sexual harassment training to employees. The legislation now awaits the signature of New York City Mayor Bill de Blasio. New York City follows on the heels of New York Governor Andrew Cuomo’s signing the Budget Bill, which contained a new state law (“NY State Act”) requiring covered employers to provide annual anti-sexual harassment training to employees as of October 9, 2018. For a more comprehensive discussion about the NYC Act and NY State Act, please see our LaborSphere blog. Also, employers will be receiving more guidance regarding what constitutes compliant training programs as New York City’s legislation, if passed, directs the NYC Human Rights Commission to develop an online interactive module that can be used to satisfy the law’s requirements. In New York, the Commissioner of Labor and the New York State Human Rights Division are jointly compelled to create a model sexual harassment training program.
Buried within a budget bill signed by Governor Andrew Cuomo on April 12, 2018 are some major changes for all New York employers in the area of Sexual Harassment. Part KK of Senate Bill 7507-C makes six changes to New York Law. Some pieces of the law went into effect right away, some are delayed until the following dates: July 11, 2018, October 9, 2018 and January 1, 2019.
Allegations of sexual misconduct against celebrities and high-profile individuals continue to occupy the national spotlight. State legislators around the country have started to propose new laws which ban confidentiality and nondisclosure provisions in settlement agreements that resolve disputes arising from sexual harassment allegations. As we wrote about in an early blog post, critics of confidentiality provisions claim these clauses enable victimizers to conceal and continue long-running patterns of sexual misconduct, and prevent discussion of the accusations among the victims and co-workers.
We have summarized the proposed legislation here:
Cheryl Orr and Phil Lebel wrote an article for Risk & Compliance magazine titled “How Can Employers Respond to Increased Risks of Well-Funded Harassment Litigation Stemming from the #MeToo Movement?” They discuss the recent uptick in sexual harassment allegations in the wake of the #MeToo campaign, which began following allegations against producer Harvey Weinstein in October 2017.
Cheryl and Phil highlight litigation finance and funding firms that have invited individuals who believe they have been victims of sexual harassment in the workplace to share their stories, seek legal representation, and, in some cases, receive “angel” litigation funding. They state that “[i]f this is, in fact, the beginning of a groundswell of harassment claims, the impact to employers could be tremendous. An increase in sexual harassment claims…could mean rising litigation expenses. Moreover, in the current social and political climate, verdicts could be increasingly unpredictable as juries attempt to ‘correct’ larger social problems by punishing employers who are found liable.” The article also notes that lawmakers in several jurisdictions are facing voter pressure to address the perceived shortcomings in the current legal framework, as applied to sexual harassment cases.
Since early October 2017, when the allegations against film producer Harvey Weinstein first surfaced in The New York Times and The New Yorker, there has been a steady stream of allegations of sexual harassment against high-profile individuals in the media, entertainment and political industries. Now, a Bay Area startup backed by Peter Thiel is looking to take advantage of a potential new wave of sexual harassment lawsuits.
On November 8, 2017, San Francisco-based litigation finance firm Legalist, Inc. launched a new initiative dubbed #MeToo Tales (“M2T”). According to its website, M2T is “a collaboration between Legalist and community organizers working to help victims of sexual harassment get justice.” M2T invites individuals who believe that they have been victims of sexual harassment in the workplace to share their stories confidentially on the initiative’s website or via a toll-free hotline. Legalist offers to pair claimants with its partner law firms and, for “eligible” individuals, to provide “angel” litigation funding of up to $100,000. Legalist recoups its funding by taking a portion of the proceeds from any successful litigation or settlement.