Dear valued clients and supporters: This month's newsletter will cover 1) new requirements for New York State and City employers related to sexual
harassment obligations; and 2) a potential payroll solution to the new federal cap on state and local tax deductions.
New York State Sexual Harassment Law Updates
As part of the 2019 New York State budget, which Governor Cuomo signed into law on April 12, 2019, new requirements and restrictions were implemented
in order to further combat incidents of sexual harassment in the workplace. As an initial matter, by October 9, 2018, employers are now required to
create a written sexual harassment policy and implement sexual harassment training for their employees. Additionally, effective July 11, 2018, the
law will render void any agreement to arbitrate claims of sexual harassment, and confidentiality provisions in sexual harassment settlement agreements
will face heightened scrutiny. Specifically, courts will only permit confidentiality provisions where i) it is the complainant's preference; 2) the
complainant has been given at least 21 days to consider the agreement; and 3) the complainant is given 7 days to revoke consent to the agreement. Finally,
the law extends the scope of sexual harassment protections to hold employers liable if they permit sexual harassment to non-employees.
New York City Sexual Harassment Law Updates
Simultaneously with the new state law requirements, New York City passed the "Stop Sexual Harassment in NYC Act," which also aims to make workplaces
safer. Much like the new state provisions, the NYC law requires all employers to provide annual sexual harassment training for employees, though this
is not effective until April 1, 2019. The law also expands the statute of limitations period for filing sexual harassment claims - now, complainants
will have 3 years to file a complaint with the New York City Commission on Human Rights or to file a private lawsuit in court. In addition, the NYC
law requires employers to maintain copies of their sexual harassment policies signed by employees for 3 years and to post educational posters in English
and Spanish, which the City is required to create within 120 days of the passing of the law. Employers are encouraged to begin the process of coming
into compliance with their new obligations accordingly.
Recent New York Payroll Law
As a work-around to the new federal cap of $10,000 on state and local tax deductions, New York legislatures have created a new optional payroll tax
that would shift the state and local tax deductions from individuals who cannot fully take it to businesses that are able to do so. Under the new scheme,
employers would be able to deduct the state taxes otherwise owed by an employee via the payroll tax and pay them on the employee's behalf. The result
would be less pre-tax income for employees, but significantly greater post-tax income, as the new payroll deduction would be less than what certain
employees would save when filing federal taxes. For now, however, many critics of the new law remain skeptical, as the administrative burdens involved
may deter many businesses from implementing the new payroll scheme, and some believe that the IRS may challenge the law and invalidate it. Also, because
employers would likely reduce an employee's salary to recover the cost of implementing the deduction, many are concerned about the complications this
will create, from the potential impact on future social security benefits, to retirement matching plans, to how much an employee pays for healthcare.
For now, while this new payroll tax appears to be an innovative work-around, the validity of this law remains to be tested and uncertainty looms around
its implementation and consequences.
Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on these and other issues throughout the month.