The “Me Too” movement has placed sexual harassment, which is prohibited by American law but remains commonplace, right at the heart of the storm. Since the accusations of sexual harassment against Harvey Weinstein exploded into the limelight, there have been daily news reports of sexual harassment, in various sectors: the entertainment industry, the US Congress, business executives, the doctor to the US gymnastics team, and senior government officials. The perpetrators have been fired, forced to resign, faced lawsuits for high damages and have even been sentenced to life in prison as a result.
The reason why ten or more years passed before victims stood up and said “Me Too,” is not only because of factors such as emotional pain, the feelings of shame, concerns about privacy and the need to maintain employment and survive, but there are also institutional obstacles that keep sexual harassment secret and prevent victims from speaking out. This secrecy has led to victims being unaware of the risks of sexual harassment because they simply do not know about violations that have previously occurred. These institutional obstacles include confidentiality agreements and compulsory arbitration agreements, which force employees to act separate from each other and silence victims. They make it very difficult for employees to tell others what happened to them. They also prevent victims from bringing class action lawsuits to vindicate their rights.
America’s legislative organs and legislators have, in the wake of the “Me Too” movement, passed revisions to the tax code, and have passed bills proposing to end confidentiality for sexual harassment as well as a bill to end mandatory arbitration, in the hope that more people will stand up and swiftly bring an end to sexual harassment, sexual assault, and gender discrimination.
Tax Law Revision Increases the Cost of Confidentiality Agreements
On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act, amending the 1986 Internal Revenue Code to reduce corporate and individual tax burdens. However, Section 162(q) of the Act clearly stipulates that if a business signs a confidentiality agreement with a victim of sexual harassment or abuse, then the related expenses, such as settlement costs and attorney’s fees, are not tax deductible. Prior to this, settlement fees and expensive attorney fees had been considered “ordinary and necessary business expenses,” which were tax deductible. Senator Menendez (D-NJ), who proposed this part of the tax bill, declared that by increasing the cost of companies covering up misconduct, they would be encouraged to effectively prevent sexual harassment.
According to Title VII of the American Civil Rights Act, workplace sexual harassment constitutes gender discrimination. Employers bear legal responsibility for sexual harassment because they have not fulfilled their obligation to provide a safe work environment. From the plaintiffs’ perspective, an employer that exists as an organization is more financially capable of bearing the burden of any award of damages than the individual who committed the harassment. From the lawmakers’ perspective, apportioning risk among those who are most capable of controlling that risk is consistent with economic principles.
Before the tax bill was passed, employers tended to settle after paying victims of sexual harassment a fixed amount of financial compensation. Moreover, within settlement agreements, victims signed a confidentiality clause, which silenced them. Generally, the behavior of harassers follows certain patterns and is repetitive. Confidentiality agreements expose employees to the continued risk of being sexually harassed, and render work environments as unsafe as they were previously. In fact, these kinds of corporate expenditures were tax deductible, and firms could purchase liability insurance, which enabled them to pass on the risk. This makes the handling of sexual harassment an economic matter.
The partners of the law firms we visited, which provide legal services for employers, told us that prior to the “Me Too” movement, after taking economic responsibility, employers usually handled sexual harassers by transferring, demoting, or even simply failing to deal with them at all. For those senior executives who brought the company high returns, substantial punishment was rare. But after the “Me Too” movement, companies are inclined to fire executives – even those running the company – who have been accused of sexual harassment, or have asked them to resign.
In an anti-sexual harassment seminar held at New York University Law School this February, an HR director at a Fortune 500 company responded to why companies are now paying more attention to sexual harassment. The HR director said that the first concern is that public media reports affect the company’s image; the second is expensive economic compensation; the third is the impact on company culture and cohesion.
2017年12月22日美国总统特朗普签署实施的《减税与就业法案》（Tax Cuts and Jobs Act）对1986年《国内税收法》（the Internal Revenue Code）进行了修订，减轻企业和个人的税收负担。但是在该法的第162条却明确规定，如果企业与性骚扰、性虐待的受害人达成保密协议，那么有关的和解费、律师费等费用就不能再进行税收抵扣。而在此之前，和解费和不菲的律师费可以通过“普通、必要的企业支出”进行税收抵扣。对该法条进行提案的参议员梅内德斯主张，通过增加企业掩盖不当行为的成本来敦促企业有效地防治性骚扰。
Bill to End Secret Settlement Agreements
A confidentiality agreement—in addition to requiring the victim to refrain from making statements to other people or to the public media—also restricts a victim’s right to sue in court. As well as applying economic pressure on companies through the tax law revision, members of the US Congress have also proposed to abolish confidentiality agreements that restrict a victim’s legal rights, arguing the agreements conceal illegal incidents of sexual harassment.
In December 2017, Representative Maloney (D-NY) and other representatives put forward the Ending Secrecy About Workplace Harassment Act, which would require employers to annually report the number of settlement agreements involving sexual harassment, sexual assault, and sexism to the US Equal Employment Opportunity Commission (EEOC).
Lawmakers in California, New Jersey, New York, Pennsylvania, and Washington, DC, have, in turn, put forward proposals calling for state legislation to abolish confidentiality agreements that restrict victims’ right to appeal.
民主党派的马洛尼（Maloney）等众议员于2017年12月提出《终结工作场所性骚扰秘密》议案（Ending Secrecy About Workplace Harassment Act），要求雇主必须每年度定期向美国平等就业机会委员会（EEOC）报告雇主通过和解协议处理的涉及性骚扰、性侵害、性别歧视的案件。
Bill to Invalidate Mandatory Arbitration Agreements
On December 6, 2017, Senator Gillibrand (D-NY) proposed the Ending Forced Arbitration of Sexual Harassment Act, which would render invalid and remove enforceability for preemptive mandatory arbitration agreements signed by employers and employees—which limit employees’ rights to appeal a sexual harassment case.
When an employee joins a company, he or she will usually sign a mandatory arbitration agreement at the request of the employer as a prerequisite for obtaining the job. In labor disputes, including those occurring after instances of sexual harassment, an employee can only seek arbitration and cannot file a lawsuit in court. It is actually a requirement for employees to give up their right to appeal.
According to a 2017 study by the US Economic Policy Institute, currently 53.9% of non-union member employees have signed mandatory arbitration agreements, and within companies hiring more than 1000 people, 65.1% of employees have signed.
Arbitration is a closed adjudication procedure, and the investigation of the facts and determination of legal liability tend to favor the employer. Unlike a court hearing, there are no discovery procedures for complex evidence, nor are there punitive damages. Compulsory arbitration means that employees who have encountered sexual harassment or discrimination cannot resolve matters in court, the victims stay out of the public’s view, and in some instances, a perpetrator may continue to engage in misconduct for years without receiving due punishment. Therefore, compulsory arbitration agreements are considered to be a contributing factor in long-term, ongoing workplace sexual harassment.
Although the bill still has not yet been passed, the proposal has already had a positive effect on HR management of large companies. According to a New York Times report from December 19, 2017 (Beijing time), Microsoft has already publicly stated that employees who have suffered from sexual harassment will be released from compulsory arbitration agreements, and that it supports the adoption of a federal law that completely prohibits such agreements.
2017年12月6日，参议员吉利布兰德Gillibrand提出“终止性骚扰的强制性仲裁法案，” 该法案规定如雇主与雇员事先签订强制仲裁协议（mandatory arbitration），限制雇员对性骚扰行为的诉权，那么这项协议是无效的，不具有强制执行力。
Proposals to Establish Sexual Harassment Training Mechanisms
US federal law does not require employers, including private companies or the government, to set up internal anti-sexual harassment training mechanisms. Instead, it regulates the issue from the perspective of exemption from liability. Where sexual harassment accusations are made and alleged to have taken place in a “hostile work environment,” an employer can be exempt from liability if it can prove that the company already provided the victim with reasonable complaint and relief procedures, and that the victim unreasonably failed to use them. This kind of system design incentivizes companies to adopt policies that actively prevent internal sexual harassment.
Before “Me Too,” California and Connecticut had clear state laws requiring employers to formulate measures to prevent sexual harassment, discrimination, and retaliation.
After many members of Congress were faced with allegations of sexual misconduct, Congress approved legislation requiring all 535 Congress members and their employees to receive mandatory anti-sexual harassment training. Maine and Virginia also proposed that employers with more than 15 employees must require mandatory anti-sexual harassment training.
On February 6, 2018, the House of Representatives overwhelmingly passed legislation by voice vote that would reform the way Capitol Hill handles sexual harassment cases, aiming to streamline the complaint process and improve public transparency. The bill would no longer require Congressional staffers to go through psychological counseling and mediation before filing a complaint. Instead, complainants would be able to immediately contact a lawyer and may choose to initiate an investigation or to file a federal lawsuit. When lawmakers settle sexual harassment charges, the legislation prohibits “public funds for private use,” and requires them to be personally responsible for any settlement fees. At the same time, the Office of Compliance would be required to publish statements online every six months, specifying the settlement fees and offices in which allegations of sexual harassment occurred.
The “Me Too” movement has given significant impetus to the prevention of sexual harassment in the US. I came to the US for an academic visit in mid-January. In three short weeks, I saw daily news about sexual harassment in the media and scrolling broadcast notices on the subway that said, “sexual harassment is a crime, if you experience sexual harassment on the subway, please notify our employees right away.” In the process of visiting the EEOC, federal judges, law offices, legal aid agencies and law professors, sexual harassment was always a hot topic of discussion.
Using a movement to promote social change has its advantages—it is rapid and passionate, it has attracted universal attention, and it will usually overcome opposing voices. But there also exists another challenge; how to protect the rights of perpetrators so that they receive a punishment that is proportional to their individual offenses? How do you prevent this kind of movement from becoming another form of oppression? Is there a rational response from a legal point of view? These are thoughts from outside the movement that also need to be considered.
(He Xia, Assistant Law Professor, Southwestern University of Finance and Economics)