Employment Law Attorneys
The Long Overdue Death Of Non-Disclosure Agreements: Uncovering The Hidden Truth Of Employment Settlements…

The Long Overdue Death Of Non-Disclosure Agreements: Uncovering The Hidden Truth Of Employment Settlements…

By Chris Avcollie,

In an often-quoted line from the hit TV series Dexter, actor Michael C. Hall, who plays the title character said: “There are no secrets in life; just hidden truths that lie beneath the surface.” For those of us involved in the resolution of employment claims on behalf of employees, this quote has special meaning. Beneath the surface of most employment settlement agreements lie the undisclosed facts that led to the conflict and which often result in the messy end of an employment relationship. Recently proposed legislation in California seeks to ensure that those “hidden truths” do not remain hidden.

California Proposes New Law – Silence No More Act (SNM Act)

A new law proposed in California this week called the Silenced No More Act (SNM Act) is intended to prevent the enforcement of non-disclosure provisions in a wide variety of employment settlement agreements. The legislation, proposed by California State Senator Connie M. Leyva, will expand upon the 2018 STAND Act (Stand Together Against Non Disclosure) and will protect plaintiffs in cases of employment discrimination and harassment of all kinds who choose to speak out publicly about their experiences. Under the current provisions of the STAND Act, only plaintiffs in cases of gender discrimination or sexual harassment may avoid non-disclosure provisions. The new law will expand the STAND Act to prevent the use of non-disclosure provisions in employee severance agreements. Under the SNM Act, targets of discrimination based on race, national origin, religion, or gender identity will also now be free to ignore the contractual gag orders companies negotiate into their settlement agreements.

This legislation has been supported by employee rights groups in California including the California Employment Lawyer’s Association and the Equal Rights Advocates.  The new laws are seen as an end to the days when employer misconduct can be hidden from public view. Workers who have been targeted with harassment and discrimination will be free to speak their truth publicly. The perpetrators of this type of misconduct can no longer hide behind the veil of secrecy provided by their company. Non-disclosure and non-disparagement agreements will no longer be used to silence employees.  The hope is that the public disclosure of the details of these abusive work environments will prevent perpetrators from targeting other workers in the future.

STAND and SNM Could Influence Other States to Pass Similar Laws

Although STAND and SNM (if it is enacted) are or would be exclusively California laws, these statutes could ultimately have a broad national impact. Other states often follow California’s lead in employment matters. Further, the fact that so many large technology companies are headquartered in California gives these laws an outsized influence on the national conversation about non-disclosure agreements. In the wake of the STAND Act, a number of states have enacted some limitations on non-disclosure enforcement including Washington, New York, New Jersey, Vermont and Tennessee. Many more states are likely to see some version of this legislation in the future.

More Cow Bell – More Corporate Disclosure and Shaming = More Equality in the Workplace

As am employment attorney, I was very curious about how this new legislation might impact the ability of plaintiff’s lawyers to negotiate settlements for clients in employment discrimination cases. Often the best leverage plaintiffs have in the early stages of an employment case is the prospect of public disclosure of misconduct on the part of a company employee or manager. The reason many companies offer settlements to claimants is to avoid embarrassing public disclosures of uncomfortable truths about their corporate culture or work environment. Companies also have an interest in keeping settlements secret to avoid what they see as “encouraging” other claimants looking to “cash in” on potential claims. In other words, the concern is that the non-disclosure and non-disparagement provisions outlawed by the STAND Act and the SNM Act are the best tools to obtain fair settlements for employees who have been targeted with harassment or discrimination.

The STAND Caveat

Further examination of the proposed statute reveals that its scope is more limited than I had anticipated. These statutes are actually structured to encourage and not to discourage early settlement of discrimination cases. The STAND Act allows for use and enforcement of NDAs (non-disclosure agreements) in cases where there has not yet been any court or agency filings. So during the initial stage of the claim, when a demand letter has been issued but where claims have not yet been filed with state or federal human rights agencies (such as the Equal Employment Opportunities Commission or “EEOC” in federal discrimination cases or the Connecticut Commission on Human Rights and Opportunities or “CHRO” in Connecticut state discrimination cases) and no lawsuit had been filed, the companies may include NDAs in settlement agreements and they are enforceable.

This exception to the ban on NDAs is highly significant. Far from discouraging early settlements of discrimination claims, this feature of the proposed law offers employers a powerful incentive to settle employment discrimination and harassment claims early. If an early settlement is not reached then the agency filings will occur and the employer will lose the right to demand an NDA as part of the settlement agreement. In order to keep employee misconduct secret, employers will have to settle employment discrimination cases early and often. While some cases can be kept secret by early settlement negotiations, targets of discrimination who want to shed light on their experience can ensure their ability to speak out by filing their claims with state and federal agencies.

What Opponents/Management/Defense Attorneys Say About Anti-NDA Legislation

Opponents of the anti-NDA legislation contend that restricting NDAs takes away a survivor’s choice to keep their case private and provides a strong incentive for employers to refuse settlement options and to defend themselves against a publicly disclosed allegation. According to Attorney Jill Basinger, an entertainment litigation partner and Michael L. Smith an associate at Glaser Weil in Los Angeles, “This harms survivors of sexual harassment and assault by removing their choice and forcing them to endure the hardship and uncertainty of a public trial as the only means of vindicating their claims.”[1] Once an agency filing occurs or a lawsuit is commenced, the NDAs become unenforceable. It seems as if these laws would remove a strong incentive for defendant employers to settle claims.

It appears, however, as if the STAND Act has resulted in an increase in pre-filing mediations in employment cases in California.[2] According to Mariko Yoshihara, the Legislative Counsel and Policy Director for the California Employment Lawyer’s Association, the predictions and fears over the STAND Act impairing the ability to settle have not borne out. According to Attorney Yoshihara, attorneys involved in this type of litigation have informally reported that the legislation has not lowered settlement amounts or impaired the settlement process. Additionally, according to Yoshihara, it has made it easier to advocate for employee rights from a public policy perspective because the targets of harassment and discrimination can make their stories public. While dispositive data on this point is not yet available, it seems as if the legislation is working in California.

Further, fears surrounding the forced public disclosure of the identity of the claimant are unfounded. Under the STAND Act there are specific provisions which protect the identity of the complaining employee in the context of a lawsuit. The STAND Act includes a specific provision that shields the identity of the claimant and all facts that could lead to the discovery of his or her identity, including documents and pleadings filed in court, at the request of the claimant. California Code of Civil Procedure 1001(c). Thus, the anti-NDA legislation does not force the disclosure of a claimant’s identity.

While many employer advocacy groups including various chambers of commerce and industry and trade associations have opposed legislation such as STAND and SNM, similar legislation should be considered by all state legislatures that have not already enacted similar laws.  When it comes to use of NDAs in employment discrimination and sexual harassment cases there is an unfair imbalance of power between the bargaining parties. The employers who are often defending the harasser or denying that the harassment occurred have an overwhelming advantage over the complaining employee in terms of investigative, legal, personnel, and financial resources. Employers are frequently holding all of the cards in a settlement negotiation. Legislation such as STAND and SNM will help to level the playing field at least with respect to NDAs.

More Power to the People/Employees – Shift In the Balance of Power

Placing the power over which aspects of the case can or will be made public in the hands of the targets of harassment and discrimination will help balance the power in the arena of employment settlement agreements. As evidenced by the initial success of the STAND Act, these laws can be an important tool in ending the culture of silence that has permitted harassing and discriminatory behavior to continue in the workplace for so long. In a recent opinion piece, the feminist writer and critic Marcie Bianco said: “If the societal change necessary for dignity and justice is to occur, we must move from awareness to accountability.”[3] This legislation should help bridge the gap between awareness and accountability. We need to see a whole lot more of those “hidden truths” lying beneath the surface of the American workplace.

If you would like more information about this article, please contact Carey & Associates, P.C. at info@capclaw.com or call 203-255-4150.

Christopher S. Avcollie

[1] Basinger, Jill and Smith, Michael L.; “How California’s NDA Restrictions Cause More Harm Than Good for Survivors” (Guest Column); Hollywood Reporter;  https://www.hollywoodreporter.com/news/how-californias-nda-restrictions-cause-more-harm-good-survivors-guest-column-1280922

[2] LeHocky, Mark, “Shining a Needed Light on Harassment and Discrimination Claims: The Collective Benefits from California’s Recent Secret Settlement Restrictions”, Contra Costa County Bar Association, March 2020;   https://www.cccba.org/article/shining-a-needed-light-on-harassment-and-discrimination-claims/

[3] Bianco, Marcie, “Britney fans angry at Justin Timberlake have a point.” CNN Opinion, February 10, 2021.

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Sexual Harassment Simplified Are You a #MeToo?

Sexual Harassment Simplified Are You a #MeToo?

Sexual Harassment Simplified Are You a #MeToo?

Interestingly, although I have subtitled this article “Are YOU a #MeToo?”, a much more fitting and powerful subtitle would have been “Is it #Time’s Up For Your Employer?” I did not chose that subtitle, because I, like many, have always used the hashtag terms interchangeably and was not focused on any distinguishable meanings between the two phrases. Admittedly, even as an established employment attorney, I was not as up as I should have been on the subtle yet ever so important difference these two viral hashtags and relied solely on #MeToo in reference to my clients’ sexual harassment claims and experiences.

#Times Up Relates to Employment Only

However, as the number of incoming phone calls involving sexual harassment cases began to soar at my firm, it was time for me to dig deeper and contemplate the nuances in the social media phenomena. While I was well versed on the law, I needed to now be equally schooled in the sexual harassment social media vernacular and how I could use it to my clients’ best advantage. And that is when I learned that #MeToo is relevant to all victims and survivors of sexual harassment of any type, in any environment, while #Times Up is specifically meant to address sexual harassment IN THE WORKPLACE!

To further explain the difference between these two hashtags, #MeToo is a movement that deals generally with sexual violence and provides a platform and voice for ending sexual violence and for survivors of sexual violence. The #MeToo movement had been around for years before it started gaining national attention after allegations of sexual harassment by Hollywood producer Harvey Weinstein captured the headlines. The movement was created in order to encourage “millions to speak out about sexual violence and harassment”, according to the #MeToo website, and to promote healing and empowerment. To say it has been successful in this initiative, is an understatement. In contrast, #Time’s Up was founded on the premise that everyone, every human being, deserves a right to earn a living and to provide for themselves and their families, free of the impediments of harassment and sexual assault and discrimination at work. #Time’s Up is specifically focused on workplace issues involving fairness, safety and equity in the workplace. As such, #Time’s up was meant to indicate to an employer guilty of such behavior that their time is up and action will be taken. BINGO!

As a result of this simple, yet vital distinction between the underlying purposes of these two hashtags, imagine how powerful and compelling it would be to have an employer receive a formal letterhead communication from our firm with the phrase #TIMES UP _______(INSERT NAME OF EMPLOYER HERE) printed in bold large font  at the top of a sexual harassment claims letter, on behalf of one of our clients. That is exactly what we do and needless to say, it is most effective.

What Is Sexual Harassment In the Workplace?

But let’s take a step back and first understand if you might have a sexual harassment case in the first place. In order to get a better grasp on that, here is your sexual harassment made simple tutorial. Harassment in the workplace is a form of employment discrimination that violates Title VII of the Civil Rights Act of 1964 and the laws in many states, including, Connecticut and New York. According to The US Equal Employment Opportunity Commission (EEOC), it is unlawful to harass a person because of that person’s sex. The law defines sexual harassment as unwelcome verbal, visual, non-verbal or physical conduct of a sexual nature or based on someone’s sex, that it is severe or pervasive, creating a hostile working environment or affecting working conditions. This definition covers a wide range of unwanted comments and behaviors directed towards the victim, but the acts will usually be of a sexually charged tenor, including unwelcome sexual advances, requests for sexual favors, and other verbal comments or physical harassment of a sexual nature. In a workplace context, the victim may not only be an employee, but also an applicant. In addition, both victim and the harasser may be either a woman or a man, and the victim and harasser may even be the same sex. Lastly, the harasser may be a manager, supervisor or person in power, a colleague or co-worker, or even a vendor. In any of those scenarios, the employer may be found liable if they caused the behavior,  knew about the behavior and did not take steps to correct and stop it, or if they should have known through the exercise of reasonable care. Lastly, employers should have strong written policies in place against sexual harassment and clear procedures set forth for reporting and addressing sexual harassment. In fact, in some states, including Connecticut, employers of a certain size, are required to provide sexual harassment training for supervisors.

Despite these general guidelines and laws, sexual harassment can take many forms and courts have interpreted what constitutes sexual harassment on a case by case basis. As such, if you feel or believe that you have been a victim of any behavior in the workplace, by anyone in the workplace, that may be sexual harassment, we encourage you to seek counsel immediately as there are statutory deadlines within which claims must be filed. We will listen to and analyze your fact pattern, in order to determine whether you might have sound legal grounds for a sexual harassment claim. It is too often the case where if something feels wrong, it is wrong, and we urge you to speak up and make this right for yourself and others.

Start Your Own Investigation: Documents and a Written Narrative

Along with seeking immediate counsel, we also instruct you to maintain a narrative of everything that takes place, including dates, times and witnesses, and to also maintain copies of all written and verbal communications between you and the harasser/employer. In addition, it is crucial to report the harassment to your employer’s Human Resources department as well as to your direct boss or supervisor.

Increased Number of Sexual Harassment Claims Filed

It is no surprise that with the #MeToo and #Time’s Up movement, the amount of sexual harassment cases has greatly increased in the past year. The data in Connecticut mirrors national trends. The EEOC’s 2018 sexual harassment data shows more than a 50% increase in suits challenging sexual harassment over 2017.  Charges filed with the EEOC alleging sexual harassment increased by more than 12% over the same time period. Anecdotal information regarding the number of sexual harassment complaints filed with the Connecticut Human Right’s Office (CHRO) in the current year suggests an even more dramatic rise in the number of these claims in the first half of 2019. No doubt, the increase in sexual harassment claims and complaints based on sex discrimination coincides with the explosion of media headlines and high profile sexual harassment cases which sparked the #MeToo movement.

The simple fact is that sexual harassment is against the law and should not to be tolerated anywhere, but particularly in the workplace where employees should have the right to do their jobs and earn their livings free from abuse, discrimination, and mistreatment. Just because Connecticut does not generate the type of celebrity fueled headlines seen in other large cities, does not mean we do not have our share of victims, and in fact the data above shows that we do.

Sexual Harassment Simplified Are You a #MeToo? If you believe you are the victim of sexual harassment, it might be time to have us put your employer on notice that their TIME IS UP and seek to help you recover monetary damages relative to your legal claims for sexual harassment and discrimination. Feel free to contact  us at the number below, if you believe you have been subject to sexual harassment situation at work, or for any of your workplace needs.

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Controlling the Psychology of Working to Your Advantage

Controlling the Psychology of Working to Your Advantage

Controlling the Psychology of Working to Your Advantage

No one discusses the psychology of work and the enormous role it plays in your everyday life.  I have researched and watched this issue for more than twenty years, from discrimination bias to contract negotiation.  I comb through client fact patterns looking for every psychological angle emanating from all the cast of characters in order to position the client to achieve success or to resolve a dispute. Why aren’t you doing this?

The Psychology of Your Manager

I know you think you know your manager, but I doubt you really know how your manager thinks and what motivates them. Psychology plays a direct and important role in such things as how your manager makes decisions regarding what jobs or tasks to assign employees and your career advancement.   Managers evaluate employee strengths and weaknesses, i.e. perceived psychology, and selectively assign tasks.  Employees are also chosen to advance based on their perceived psychology about whether they will be effective in handling the responsibilities of the new position. If you are blind to the role of psychological analysis, get your head out of the sand and in the game! Think of your job like a chess or strategy game, you need to consider every conceivable variable that will impact your chosen goals, both positively and negatively.  If you are not evaluating your opponent, i.e. your boss or coworker, you will not advance in your current position or your career.  I am not asking you to confront your boss with your new found psychological intelligence, keep it to yourself and use it to guide you when making critical decisions to your benefit. Successful employees and executives do this every day.

Here is what to look for when evaluating your boss’s psychology in order to gain an advantage:

(1) Evaluate facial and body cues that may show a degree of nervousness or over aggressive micromanaging (polar opposites), facial and body cues are one of the most important signals to read when assessing your opponent. (2) Examine the person’s prior work conduct toward yourself and other employees and the reaction those individuals had in relation to the decision being made. Was there a consistent logic flow or arbitrary selection decision making process without basis? (3) Go beyond the email language and check if the person really intended what was stated, email can be misleading. (4) Examine the individuals the person promotes and if they are a logical fit or the result of office favoritism and worse, discrimination. (5) Examine the potential for personal issues being brought to the office and determine if they are playing a role in the person’s work life. This list is by no means exhaustive of the possible variables impacting your opponent’s decision making.

The Psychology of Your Coworkers and Yourself

When you arrive at work, you walk into an office workspace filled with a multitude of personal psychologies.  There is no control other than the corporate mind speak dished out by the company or what you believe the proper protocol to acting professional is.  There is no discussion about how to manage yourself or others while at work. Sure, there are rules regarding behavior, but in reality, employees are thrown into the workplace and are just expected to know how to act and react moment by moment. Short of being fired for poor misconduct, how do you navigate the psychological warfare of the office? The solution is to become aware or mindful of your interactions with co-workers, including supervisors, especially when you are having a bad day.  Take a week and just observe the behaviors of others but don’t be reactive, just observe.  While you’re observing various office behavior, listen to your inner voice, you know the voice that is talking inside your head right now as you read this.  The more you become aware of this inner voice, the more self-control you will have during moments you need it most.  That inner voice is the reactive brain and not your conscious brain, it just keeps on talking at you over and over all day long.  Listen to your conscious brain, the one you make decisions with and the one you use to learn new information. Notice that the conscious brain does not ramble on at you, it is more concise and logical, not dramatic and overblown. Another method of handling the office psychology is to observe the expectations you set for yourself and others. Stop working from those expectations and focus on the current issue you are experiencing.  Your own expectations may be causing the problem you may be experiencing but you just don’t know it.  We pre-imagine how events in our work life should result, but we never really think about how we created those expectations in the first place. When the crap hits the fan and our expectations are dashed, we tend to blame ourselves or others in a knee-jerk reaction.  We never stop to think about our own thought processes, we just accepted what our mind (inner voice vs. conscious mind) said to us. As employment attorneys, we confront the end product of psychology in the workplace and are requested to find solutions.

Controlling the Psychology of Working to Your Advantage.  If you would like more information about this issue, please contact our employment lawyers at Carey & Associates PC at 203-255-4150 or email to info@capclaw.com.

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A Quick Fix for Sexual Harassment Cases

A Quick Fix for Sexual Harassment Cases

A Quick Fix for Sexual Harassment Cases

If public shaming is the new normal for dealing with sexual harassers, then how do we fix the ineffective sexual harassment laws currently in place?  I have the quick fix and it makes perfect sense.

Make Sexual Harassers Personally Liable

Currently, when sexual harassers do their evil deeds, there is no penalty.  Under federal law, only employers are liable.  In a few states, offenders are held personally liable, for example, Massachusetts and Ohio.  If the harasser understands that placing his hand on a woman’s breast or other body part has a $150,000 price tag for the single act, the harasser will think twice. If the harasser also understands that they could lose their job in addition to paying a huge settlement to the victim, then they would avoid groping other employees.

Remove the Caps on Damages Under Federal Law

Under federal law, damages for sexual harassment offenses are capped at $300,000 for both back pay and punitive damages.  Trust me, this compromise struck between Congressional Democrats and Republicans in enacting the 1991 Civil Rights Act was far too low to make any real difference to deter sexual harassment.  We need to remove the cap on damages that were promoted by the Washington D.C. K Street lobbyists whom promoted the caps in the first place.

Make All Settlements of Sexual Assault and Sexual Harassment Public But Conceal Victim Identities

I recently wrote about making sexual harassment settlements transparent. Transparency of all sexual harassment settlements will deter both the employers and employees from engaging in unwanted sexual harassment.  We would hope that companies do more to take care of the very employees who promote the employer’s products and services; the same employees who have close professional relationships with their customers and vendors.  While transparency will add further deterrence, we also need to conceal the identities of the victims of sexual harassment in settlement agreements.  There is no need to harm these victims any further.

All Perpetrators of Sexual Assault and Sexual Harassment Will be Listed on the National Sex Offenders Registry

If the price tag for an occasional groping did not stop bad behavior, the next solution will.  Currently, we have a nationwide sex offender registry.  If you are convicted of criminal or civil sexual assault, you are automatically registered on the sex offender registry.  We now need to modify current state and federal laws regarding sexual harassment at work and place all perpetrators of sexual assault and harassment on that list.

Provide a Tax Deduction to Victims of Sexual Assault and Sexual Harassment for Pursuing Claims of Discrimination

Prior to the 2018 tax overhaul, victims of sexual harassment could claim a tax deduction for legal fees and expenses in pursuit of sexual harassment claims.  The tax act removed that benefit from both employers and employees.  I propose reinstating the tax benefit only to employees who are the victims of sexual harassment.  Frankly, it is morally the correct thing to do.  We should not be cutting victims off at the knees.

A Quick Fix for Sexual Harassment Cases. If you have questions or would like to speak about an issue you’ve encountered in the workplace, we help clients located in New York, Manhattan, Connecticut, and nationwide. Contact Carey & Associates PC at 203-255-4150 or email to info@capclaw.com.
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Sexual Harassment Investigations and Settlements Must be Transparent

Sexual Harassment Investigations and Settlements Must be Transparent

If a woman makes a sexual harassment complaint to her employer, should the claim and the resulting settlement be confidential? The short answer is “no.”

INTERNAL SEXUAL HARASMENT INVESTIGATIONS SHOULD BE TRANSPARENT

When an employee files an internal complaint of sex discrimination or sexual harassment, the company immediately begins an internal investigation.  However, the complaining employee will never know the result of the internal investigation and she lacks any legal rights to demand a written or verbal finding.  Employers are mandated to conduct the investigation under federal law, if the employer wants the protection of an affirmative defense that it took action to remediate the underlying cause of the sexual harassment complaint.  You would think an “investigation” would have some curative effect, but it does not.

The corporate investigation should be open for all to see how terrible a male co-worker or supervisor actually behaved toward his female counterpart.  We cannot bury our heads under the cover of confidentiality of corporate investigations, just because the legal department said so.  The only reason why companies keep corporate investigations confidential is because the company is seeking to build a case to protect itself against the complaining employee; there is no value to the employee whatsoever.

THE SETTLEMENT AGREEMENT SHOULD ALSO BE TRANSPARENT

Employers love confidentiality provisions in settlement agreements.  They and their counsel claim the company is buying confidentiality in exchange for the settlement payment.  In reality, the company is buying the release of legal claims.  Confidentiality provisions have long been a staple of settlement agreements, in particular in employment discrimination cases, because employers demand them.  Employees who complained of sexual harassment did not demand confidentiality.  Employees want public disclosure in order to signal to other employees to watch out for the alleged perpetrator so he does not repeat the offense on others.  In addition, public shaming of individuals who commit sexual harassment offenses is now the norm.

Today, Congress has taken one step closer to making confidentiality provisions illegal.  The new  Tax Cuts and Jobs Act seeks to restrain corporate tax deductions for legal fees and settlements related to sexual harassment claims.  In essence, if a corporation wants a tax deduction it has to make the settlement of sexual harassment cases public and not confidential.   If the company seeks the confidentiality clause in the settlement agreement, they are prohibited from taking the deduction.

See a similar discussion on the same topic at #metoo Sexual Harassment Laws Are Broken.

Sexual Harassment Investigations and Settlements Must be Transparent. If you have employment law questions or need help with specific workplace issues, contact Carey & Associates PC at info@capclaw.com or 203-255-4150. Our employment lawyers can consult with you regarding your issue and offer guidance on next steps.

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#metoo Sexual Harassment Laws Are Broken

The momentum for the #metoo movement came out of nowhere.  Someone had the courage to speak out to the detriment of their own reputation.  But why only now? All the stories evolving out of the #metoo movement came years after the incidents occurred. Many of these employees had full access to state and federal laws to complain about sexual harassment, yet presumably many did not pursue their claims out of fear (the “silence keepers”).  Our sexual harassment laws are broken and as far as I can see, these laws will remain broken for years to come.  It now appears that public shaming is the only effective way to stop sexual harassment.

1. Women Fear Making Complaints

Women fear making sexual harassment complaints because they anticipate termination and ruined careers. The fear is real and there are no statutes that address this issue and encourage employees to come forward.  Every client I have represented who maintained a sexual harassment claim experienced fear of retribution by their employers if they complained. Each client was verbally intimidated by their perpetrators and employers immediately after their internal/external complaints were filed.  These clients immediately found themselves the focus of an unfounded performance improvement plan or similar negative reaction. The employer made the work life so difficult, these employees were fired or quit because the psychological office pressure proved too much to endure.  Sure, there are state and federal anti-retaliation statutes designed to deter employer retaliation, but employees have to sue in court to enforce this type of claim.  The current system is stacked in favor of employers and nothing is being done to change this inequality.  Not even the U.S. Equal Employment Opportunity Commission is capable of correcting this problem.

Sexual harassment statutes are ineffective, outdated and need to be overhauled, as less than 1% of complaints filed in court win at trial compared to with an Employer success rate of 14%! (EEOC and court statistics).  The remaining 85% of the other cases were resolved via settlement.  However, no database exists to determine the actual results of the 85% of cases that settled, i.e. the of amount of corporate hush money paid to the victims of sexual harassment.

2.  Economic Incentives Are Part of the Problem

Prior to January 1, 2018, employers could write off litigation and settlement expenses related to employee sexual harassment claims. Corporations received a corporate tax deduction for expenses related to sexual harassment claims brought against the company.  Obviously, this corporate tax deduction has not deterred bad behavior.  Ironically, the total number of sexual harassment complaints filed with the EEOC each year since 2010 has decreased (FY 2010 [7,944] – 2016 [6758]).  I believe this decrease demonstrates that employees who have experienced sexual harassment have given up any hope they will be treated fairly and they have decided to remain quiet instead of rocking the boat.  The above decrease has nothing to do with the effectiveness of sexual harassment training,  as NPR reported on November 8, 2017, “[t]he primary reason most harassment training fails is that both managers and workers regard it as a pro forma exercise aimed at limiting the employer’s legal liability.”

In a partial reaction to the #metoo movement pressure, Congress enacted the Tax Cuts and Jobs Act which eliminates any tax deduction corporations may take for “payments related to sexual harassment and sexual abuse- No deduction shall be allowed under this chapter for- any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement; or attorney’s fees related to such a settlement or payment.”  The expected result of this provision is two-fold. Employers cannot take a tax deduction for legal fees, expenses and settlement payments if they use a confidentiality provision in a settlement  agreement. Congress’ intent was clear, make all sexual harassment settlements public and not shield them behind secret agreements.  The tax reform partially removed the economic incentive as  employers may choose not to take the tax deduction in favor of confidentiality and concealing sexual misconduct at work.  Corporate reputation is the paramount concern for employers and will outweigh the economic value of the deduction.

3.  Tax Reform Law Eliminated Employee Tax Deduction for  Legal Fees

However, there was a unique intended consequence of the above provision in the Tax Cuts and Jobs Act.  Prior to January 1, 2018, employees could take a deduction against gross income for attorney’s fees spent pursuing sexual harassment claims.  Today, the Tax Cuts and Jobs Act eliminated this valuable deduction for employees who pursue sexual harassment claims, a financial disincentive. This may have been an unintended consequence of the new tax law, but nonetheless an adverse consequence to employees experiencing sexual harassment on the job. In my opinion, this economic disincentive will decrease the number of claims filed against companies. The Act punishes victims of sexual harassment.

#metoo Sexual Harassment Laws Are Broken. If you have employment law questions or need help with specific workplace issues, contact Carey & Associates PC at 203-255-4150 or email to info@capclaw.com.  Our employment lawyers can consult with you regarding your issue and offer guidance on the next steps.

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