The #MeToo movement has been successful in calling attention to the prevalence of sexual abuse and harassment in the workplace. It emerged as a response to sexual abuse allegations against Hollywood and media figures and encourages victims to speak out. As a result, employers doing business in New York now face a host of legally mandated sexual harassment prevention requirements. New York State and New York City, in separate but largely overlapping laws, now place specific requirements on employers as to how to address, resolve and prevent claims of workplace sex harassment.
“How does that affect my business?”, you say. Here’s the simple version:
- New York City employers have to meet the requirements of both laws. Example: a Brooklyn-based bakery
- NY State employers only have to comply with the state law: Example: an Albany-based engineering firm
- Regardless of location, you have to comply with the state law if you’re bidding on contracts in the State of New York. Example: a Philadelphia-based general contractor bidding on NY State or NYC contracts has to comply with the state law.
“What exactly are the requirements?” Glad you asked. Let’s break it down:
Anti-Harassment Legislation: New York State Requirements
Sexual harassment policy
All New York State employers must adopt a sexual harassment prevention policy which must be provided in writing and:
- prohibits sexual harassment and provides examples of prohibited conduct;
- clearly states sexual harassment is a form of employee misconduct and that sanctions will be enforced against individuals engaging in sexual harassment and against supervisory management who knowingly allow such behavior to continue;
- includes information concerning federal and state sexual harassment laws and mentions there may be applicable local laws;
- includes a standard complaint form;
- includes a procedure for the timely and confidential investigation of complaints including due process for all parties;
- informs employees of their rights of redress and available forums for adjudicating claims administratively and judicially
- clearly states retaliation against individuals who complain of sexual harassment or who testify or assist in any proceedings is unlawful.
All employers must provide sexual harassment prevention training to all New York employees, and will be required to conduct this training for existing employees every year. This interactive training must include:
- an explanation of what constitutes sexual harassment;
- examples of conduct constituting unlawful harassment;
- information concerning the federal and state laws concerning sexual harassment and remedies available to victims; and
- information concerning employees’ rights of redress and forums for complaints.
The sexual harassment policy and annual training requirement under New York State law go into effect on October 9, 2018.
Anti-Harassment Legislation: New York City Requirements
Employers located in New York City with fifteen (15) or more employees must also display a state-issued anti-sexual harassment rights and responsibilities poster, and provide a state-issued information fact sheet on sexual harassment to new hires by September 6, 2018.
In New York City, employers must conduct training for all new NYC hires within 90 days of employment. The City law will also require training on bystander intervention.
The City law will also require employers to generate and keep records of all trainings, including obtaining signed acknowledgments, and maintain them for three years.
Threats: Increased Exposure for New York Businesses
What impact will those new requirements have on businesses on a day-to-day basis? Well, now that sexual harassment is getting all this press, and that more and more people are willing to share their stories, employers are now facing new risks. Let’s take a look:
Threat #1: Third party liability
As an employer, you may now be held liable for sexual harassment allegations by non-employees who have been contracted to provide services in the workplace (contractors, “freelancers,” vendors or consultants). You can certainly limit your liability for the sexually harassing conduct of individuals beyond your direct control. Nevertheless, it is recommended that you adopt, publish and enforce policies that make clear that the company will not tolerate inappropriate conduct by anyone towards anyone in the workplace.
Threat #2: Jump in sexual harassment complaints
Complaints of sexual harassment in California nearly doubled in the first three months of 2018, while New York state has seen a 60% increase since the Harvey Weinstein scandal broke last fall. From January through March, the California Department of Fair Employment and Housing received 939 complaints of sexual harassment. That’s an increase of 86% from the same period in 2017, when the department received 504 complaints. In New York, the state Division of Human Rights received 353 complaints from Oct. 1, 2017, through April 30. That’s an increase from 220 complaints for the same period a year earlier.
Threat #3: Ban of the use of non-disclosure agreements for sexual harassment claims
The confidentiality agreements prevent victims from pursuing claims or lawsuits in perpetuity, in exchange for a settlement package, effectively protecting the harassers. Companies in NY State are no longer be able to use nondisclosure agreements to keep sexual harassment claims from becoming public. Along the same lines, companies are also forbidden from using mandatory arbitration for sexual harassment claims.
How to Protect Your Business
Obviously, as a business owner, you have to take this new reality into account. Here at Financial Blind Spot, we always say that hope is not a strategy. When we speak to smaller companies, we almost always hear variations of the following:
- We are a really small company and this is not something we have to worry about
- We treat our staff like family
- If this were to happen, we can take care of it internally
To this, we offer the following:
- 41% of employee lawsuits are brought against companies with less than 100 employees
- 51% of lawsuits are won by the employee or other plaintiffs
- Assuming that the claim is settled out of court, the average harassment claim will typically run an organization anywhere from $75,000–$125,000.
- If it goes to court, employers are often looking at more like double those numbers, again in legal fees alone.
In light of this, we offer a more sustainable, realistic, and proactive 3-prong strategy:
Training – Documentation – Insurance
Protection Plan, Part 1: Training
Express your organization’s commitment to prohibiting harassment based on sex and other protected classifications
Prevent discrimination in the workplace by:
- Becoming Familiar With All Applicable Antidiscrimination Laws
- Developing and Implement a Comprehensive Antidiscrimination Policy
- Developing and Institute Mandatory Antidiscrimination Training Programs
- Being Prepared to Investigate Complaints of Discrimination or Harassment
- Analyzing Business Decisions for Unintentional Discrimination
Your company will be on much stronger footing if your employees receive adequate training and can confidently answer the following questions, as they relate to your business:
- What is good cause for termination?
- What is proper procedure for termination or demotion?
- When and how is an investigation conducted?
- What are layoff rights and duties?
- What are rights in performance appraisals?
- What are rights in hiring and references?
- When can employees quit and sue?
Assure employees that they will not be retaliated against for complaining. Provide multiple options (including anonymously) for employees to complain about harassment.
All managers and supervisors should be trained on harassment avoidance and prevention: they should be role models when it comes to setting the standard for acceptable behavior
Protection Plan, Part 2: Documentation
The importance of a clear, concise employee handbook cannot be overstated. An employee handbook:
- Set forth expectations for employees: define your culture, mission, and values, and communicate to employees what is expected of them.
- Protect employers
- Establish information about the company’s policies:
- Clarify policies on using gadgets and other electronic equipment
- Define performance parameters and benefits:
- Publish company policies on employee safety measures and procedures to ensure compliance with federal, state, and local laws
When called upon to defend an employee’s termination in a discrimination or other wrongful termination lawsuit, being able to point to the employee’s job description as evidence of the employer’s legitimate expectations can be powerful evidence to rebut an allegation of discrimination. Demonstrating that an employee cannot perform an essential job function as described in a job description can be convincing evidence that there is cause for discipline or termination.
Protection Plan, Part 3: Insurance
Employment Practices Liability Insurance
Let’s face it: stuff happens. You might take all precautions but still get hit with an allegation. That’s when the insurance component of your plan matters. Employment practices liability insurance can protect your business from claims arising from employment-related issues, including sexual harassment, wrongful termination, discrimination, and so on.
EPLI will ensure that your company has the means to survive the financial hit that comes with an employment-related lawsuit. Even if the case is ultimately dismissed, having EPLI coverage can save you tens of thousands in attorney’s fees alone. Also, even job candidates could sue you if you ask the wrong question during an interview, or if they perceive that they were treated unfairly in the job application process.
The cost of EPLI depends on several factors, most importantly the number of employees, the industry, hiring and firing policies and any history of prior legal action against your company. It is important to point out that a lot of carriers inquire about adequate personnel policies before providing an estimate for EPLI coverage (which circles back to our recommendations to train and document).
For obvious reasons, it is best to get an EPLI policy before your business has a claim or lawsuit. EPLI applications specifically ask if you’ve had any prior claims or know of any pending allegations. You will be much less likely to receive a favorable quote if this is the case.
Unfortunately, sexual harassment claims are only going to rise. It makes sense to take the necessary steps to:
- establish an anti-harassment environment in your business through proper training
- develop procedures to set expectations both in terms of performance and employee behavior
- manage the risk of being a target of allegations with properly structured EPLI coverage.
Financial Blind Spot can help. Get your complimentary assessment today!