On June 19, 2019, the New York Legislature voted to reform New York discrimination law. See NYS Assembly Bill No. A8421.  Although Governor Andrew Cuomo is expected to sign the bill, as of August 7, 2019, it still has not been delivered to him.

This post will focus on changes regarding mandatory arbitration and non-disclosure clauses, the Faragher-Ellerth defense and damages awards.  Below is a summary of some of the provisions in the bill including those covered by our prior post on the expansion of the New York State Human Rights Law (“NYSHRL”), and the effective date of each provision.

In 2018, in response to the #MeToo and #TimesUp movements, New York State enacted laws to provide stronger protections against workplace sexual harassment, including mandating that New York employers have a complaint and investigation process and a sexual harassment policy, and provide their employees with training.

On June 19, 2019, the New York Legislature voted to further reform New York law and to extend protections under the New York State Human Rights Law (“NYSHRL”) to employees of all protected categories from all forms of discriminatory harassment in the workplace.  See NYS Assembly Bill No. A8421.  The bill is expected to be signed by Governor Andrew Cuomo, who supported the measure.

Once enacted, some provisions will take immediate effect while others will be phased in over the course of one year.  Here is the timeline for some of the provisions:

In October 2018, the New York City Council passed two bills, Int. 879-2018 and Int. 905-2018, to supplement existing federal and state laws concerning lactation accommodation policies in the workplace.  Currently, New York State Labor Law Section 2016-c  mandates employers to provide employees with a reasonable number of breaks; and a private sanitary space, other than a restroom, with a chair and flat surface on which to place the breast pump and other personal items, to express breast milk during the workday.

Effective March 18, 2019, Int. 879-2018 requires NYC employers, with four or more employees, to provide lactation rooms[1] with an electrical outlet, as well as refrigerators, in reasonable proximity to work areas, for the purposes of expressing and storing breast milk.  Those employers who cannot provide a lactation room, as required under the new law because of undue hardship, are required to engage in cooperative dialogue with affected employees to find a reasonable, alternative accommodation.

The second measure, Int. 905-2018 requires employers to “establish, and distribute to all new employees, policies describing lactation room accommodations, including the process by which an employee can request such accommodation”.  The policy shall: (1) specify how an employee can submit a request for a lactation room; (2) require the employer to respond to such a request no later than five (5) business days; (3) provide a procedure to follow when two (2) or more individuals need to use the lactation room at the same time,

The recently enacted Tax Cuts and Jobs Act eliminated a business expense deduction for settlements of sexual harassment and sexual abuse claims that are subject to confidentiality restrictions.  Specifically, a “settlement or payment related to sexual harassment or sexual abuse,” and the “attorney’s fees related to such a settlement or payment,” are no longer a deductible business expense “if such settlement or payment is subject to a nondisclosure agreement.” IRC §162(q) (added to the IRC by §13307 of the TCJA).  Section 13307 became effective on December 22, 2017.

This new Code provision raises many questions, which the IRS has not yet addressed, including:

What is the impact of IRC §162(q) on the settlement process for sexual harassment or sexual abuse claims?

Employers will need to weigh the additional costs of a nondisclosure provision, which include the tax on the settlement payment and related attorney’s fees, and the value of a nondisclosure provision to the employer with respect to the specific claim asserted by an employee.  Rather than “boilerplate” in a settlement or separation agreement, nondisclosure provisions will need to be assessed on a case-by-case basis.

Attorneys for both employers and employees will need to track time separately for “attorney’s fees related to such a settlement,” since an employer may determine that a nondisclosure provision is an essential term of the settlement, and then neither the employer’s nor the employee’s attorneys’ fees related to the settlement will be deductible.

What attorney’s fees are “related to such a settlement”?

Certain fees appear

In mid-May, the New York Times published a long article reporting a national trend that employers are expanding both the number of employees who are required to sign non-competition agreements and the types of employees required to sign these agreements.  The article emphasized stories of low-paid, low-level employees who could not find a new job, or had to take a lower paying job, because they signed a non-competition agreement.  The Times ran an editorial that urged legislatures to prohibit employers from restricting the employment opportunities of lower paid employees.

What is missing from this picture?

While the Times article mentioned states vary in enforcement of non-competition restrictions, noting that California prohibits all restrictions on employees moving to new jobs, it did not explain the important differences in how states other than California enforce non-competition restrictions.  The Times article also did not report the damage to a business that may result from an employee’s taking advantage of trade secrets learned while working for the former employer, or of customer relationships that were entrusted, to compete unfairly with the former employer.

We asked a few of our non-competition attorneys for their perspectives on some of the questions raised by the Times article: Why do companies require lower-level employees to sign non-competition agreements? How typical is it for companies to seek to enforce those agreements for lower-level employees?  How do courts in each state respond to those enforcement efforts?

Arizona

Under Arizona law, restrictive covenants are disfavored and are construed narrowly by