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This bill would dramatically change the long-held standard for determining when certain workplace behavior rises to the level of unlawful discrimination, limits an important and long-held employer defense, and place severe restrictions on the use of non-disclosure agreements and the arbitration process. The Business Council opposes this bill.
Private-sector businesses have been the champions for reducing harassment in the workplace. Since its peak in 1997, the EEOC reports a decrease of over 40% in the number of harassment claims. In fact, the number of EEOC charges alleging sexual harassment dropped every year between 2010 and 2017 – a 15.7% drop. This decrease is the direct result of employers implementing policies and training that have, in general, created a climate of respect in the workplace. Recent high profile harassment allegations in entertainment and government have again shined a spotlight on this issue. Radical changes to current law and best practices, however, is not the solution.
“Severe or Pervasive”
Since 1993, Courts have held that for harassment to be actionable under federal law the offensive conduct must be sufficiently severe or pervasive to alter the conditions of the victim’s employment and create a hostile working environment. Harris v. Forklift Systems, Inc., 510 U.S. 17, 21- 22 (1993). This standard requires that the environment be both objectively and subjectively offensive. In other words, for actionable harassment to exist, a reasonable person must be able to find the work environment hostile or abusive, and the victim must actually perceive it to be so.
This approach is supported by long-standing policy of the Equal Employment Opportunity Commission (EEOC). It defines unlawful harassment as unwelcome conduct that is based on a persons protected characteristic where 1) enduring the offensive conduct becomes a condition of continued employment, or 2) the conduct is severe or pervasive enough to create a work environment that a reasonable person would consider intimidating, hostile, or abusive.
Disbanding the severe or pervasive standard under New York State law would have several negative consequences, for employers and employees alike.
First, it would diminish the impact of actual harassment by equating it with a single minor occurrence of bad behavior. By allowing all instances of questionable behavior to rise to the level of actual unlawful harassment will trivialize legitimate harassment complaints.
Second, as New York State law now requires that every complaint of perceived harassment be investigated by the employer – and that investigation to be documented – removal of this standard would create a significant increase in administrative burden on employers of all sizes as they spend time and resources investigating all types of workplace behavior whether or not unlawful harassment has occurred.
Third, recent changes to New York Labor Law encourage employees to seek remedies from the Division of Human Rights and in some cases, the EEOC. By lowering the standard for harassment, these agencies can rightly expect a flood of complaints – many minor and easily corrected in the workplace – that would choke the system and interfere with timely resolution of serious, systemic harassment claims. In fact, since Albunio v. City of New York (2011) lowered the standard under New York City Human Rights Law to being treated “less well,” the Division of Human Rights has seen a 62% increase in complaints – some legitimate, some not.
Finally, removing the severe or pervasive standard will mislead employees to believe that they need to address their complaints through legal action. It is likely that federal courts will review the totality of the circumstances and continue to apply some kind of subjective standard to when bad workplace behavior reasonably crosses the line to be unlawful workplace harassment. The EEOC, in fact, specifically states that “petty slights, annoyances, and isolated incidents (unless extremely serious) will not rise to the level of illegality.”
While we oppose the explicit rejection of the severe or pervasive standard for assessing whether workplace behavior is unlawful, we do recommend language that encourages consideration of the totality of the circumstances surrounding the alleged harassment as suggested by the Supreme Court in Harris. That harassment …”is such that a reasonable person would find the work environment hostile or abusive, and that the victim actually perceives it to be so.”
Limitations on a Key Employer Defense
This bill also seeks to limit a key affirmative defense of liability long made available to employers for hostile work environment harassment occurring between and among employees. Often, harassment occurs between non-supervisory employees out of sight or without the knowledge of their supervisors or the employer. Since the Supreme Court’s decision in Faragher v. City of Boca Raton, 524 U.S. 775 (1998), employers have been provided an affirmative defense from liability if they show they could not have known about such harassment and therefore were unable to stop it from occurring.
Accordingly, best practice required that employers adopt harassment prevention policies that encouraged employees to report all incidents of harassment and required all supervisors to report harassment. These best practices, supported by recommendations from the EEOC and adopted in the 2018 New York State sexual harassment reforms, require that these polices provide for “multiple avenues of complaint.” Should a policy not include multiple avenues of complaint, employers would not have the affirmative defense available to them. Nothing in this bill would enhance an employee’s right of redress beyond what is in current law.
Since 1970, the Occupational Safety and Health Act (OSHA) has required that employers provide a workplace free from recognized hazards likely to cause harm to employees. The success of OSHA relies on employers and employees creating a culture of safety by encouraging employee participation in creating such a culture. Likewise, a harassment free culture would be better served by supporting employer/employee cooperation and dialogue in the workplace. This bill would undermine that goal by actually encouraging employees to seek third party intervention regarding workplace behavior that may or may not be slightly more than “petty slights and trivial annoyances.”
Non-Disclosure Agreements
While we do not generally oppose the expansion of current restrictions on non-disclosure agreements to forms of discrimination other than sex-based discrimination, this bill proposes to further weaken terms and conditions of such agreements. Restrictions on these agreements make settlement less attractive to employers. As these provisions provided some “value” to employers, limiting that value would necessarily be reflected in settlement amounts to aggrieved employees. The net result may be that employers will be less likely to offer settlement agreements, or that such settlements will be of less value to the employee. Either way, employees may face no other option than drawn out, expensive litigation.
Arbitration Clauses
Arbitration is an important tool benefiting employees by providing a fair and accessible means for resolving disputes. The Federal Arbitration Act, 9 U.S.C. §2 states that a written provision in a contract providing for arbitration as a means to settle disputes “…shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” The United States Supreme Court has consistently ruled that federal and state courts must enforce the Act and “reflects an emphatic federal policy in favor of arbitral dispute resolution’” Marmet Health Care Center, Inc. v. Brown 132 S.Ct.1201 (1202) quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213,217 (1985).
Arbitration enables employees with grievances to obtain redress for the vast majority of disputes they are likely to have – small, individualized claims for which litigation in court is impractical. It also serves the court system by providing an alternative means of resolution thus freeing up the already overburdened state court system.
Naysayers argue that arbitration clauses threaten due process because employees are deprived their day in court. In fact, the process of arbitration generally provides an employee with a forum to obtain redress for actions alleged committed by companies in a fair and expeditious manner without the burden of attempting to navigate the court system.
Many of the “advocates” arguing against the use of arbitration are actually proponents of (and beneficiaries of) class action lawsuits. It is debatable whether class actions provide employees with better outcomes. It is not uncommon for employees, as parties to a class action to see results of minimal compensation but generous fees for the attorneys that instituted the litigation. One needs to question whether employees truly benefit from class action settlements.
The American Arbitration Association (AAA) administers employee arbitrations and has implemented rules and policies tailored for the resolution of employees’ disputes, which provide basic requirements of procedural fairness and afford strong protections for employees and employers. If the goal of the legislation is to ensure fairness and accountability, it appears as though a system is already in place thus obviating the need for such legislation.
Significant reforms regarding sexual harassment policies and training were implemented in 2018. Employers continue to implement these best practices. These previously implemented reforms should be given a chance to produce results. For the reasons stated above, The Business Council opposes this bill.