#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Sexual harassment statutes are ineffective, outdated and need to be overhauled, as less than 1% of complaints filed in court win at trial compared to with an Employer success rate of 14%!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.

If you have employment law questions or need help with specific workplace issues, contact Mark P. Carey, P.C.  Our employment lawyers can consult with you regarding your issue and offer guidance on the next steps.