Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
On July 17, 2018, a bipartisan group of House lawmakers—Reps. Lois Frankel (D-FL), Ted Poe (R-TX), Jerrold Nadler (D-NY), Barbara Comstock (R-VA), and Lisa Blunt Rochester (D-DE) —introduced legislation targeting workplace harassment. Senators Kamala Harris (D-CA) and Lisa Murkowski (R-AK) introduced a companion bill in the Senate last month. The Ending the Monopoly of Power Over Workplace harassment through Education and Reporting (EMPOWER) Act (H.R. 6406, S. 2994) would, among other obligations, ban nondisclosure and non-disparagement agreements related to harassment as a condition of employment or receipt of employment-related benefits, and would require certain public disclosures. This federal bill comes on the heels of several state-level proposals stemming from the #MeToo movement.
EMPOWER Act Provisions
The first substantive section of this legislation would make it an unlawful employment practice for an employer to include a new, or enforce an existing, non-disparagement or nondisclosure clause that covers instances of harassment – including sexual harassment or retaliation for reporting, resisting, opposing, or assisting in the investigation of workplace harassment – if the agreement is used as a condition of employment or as a precondition to receiving promotions or other benefits. These restrictions would not apply to nondisclosure or non-disparagement clauses in settlement or separation agreements that resolve legal claims or disputes that arose before the agreements were executed. The protections would cover employees, job applicants, and other "outside workers" such as independent contractors, temporary workers, and volunteers.
The EMPOWER Act would also create a confidential tip line for reporting violations of the Act or instances of systemic harassment to the Equal Employment Opportunity Commission (EEOC). The EEOC would have the same authority and procedures to pursue violations of the EMPOWER Act that it currently possesses to pursue Title VII violations. The tip line would allow for confidential, but not anonymous, reports, and would serve as a supplement to the EEOC’s formal complaint process.
The proposed legislation would also require public companies to make certain disclosures regarding harassment settlements or judgments as part of their annual SEC filings. Under the terms of the bill, any employer required to submit a Form 10-K to the SEC would also need to report, among other information, the number of settlements reached in relation to workplace harassment and whether any judgments or awards (including through arbitration or administrative proceedings) were entered against the company in whole or in part, and the amount paid.
With respect to workplace training, the EMPOWER Act would require the EEOC to develop anti-harassment training materials, as well as a public service advertisement campaign to disseminate the training information.
Finally, the EMPOWER Act would limit certain employer tax deductions. The Act would prevent employers from receiving tax deductions for expenses and attorneys’ fees connected to litigation of workplace harassment. The Act would also prohibit deductions for payments made under judgments related to workplace harassment. Amounts received in connection with such awards and settlements would be considered nontaxable income.
Will it Pass?
Given the bipartisan nature of this bill, the continued national discussion spurred by the #MeToo movement, and the advancement of similar state-level laws, the EMPOWER Act could advance this year, although it's too early to predict its long-term chances of success. Compounding the uncertainty is the fact that the House has only about three weeks of floor time to consider legislation before the midterm elections, and the Senate will likely be preoccupied with the U.S. Supreme Court nomination.
In the meantime, we will continue to monitor the bill’s progress and report on any significant developments.