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Anne Knox Averitt is a labor and employment and litigation associate in the Birmingham office. She represents governmental and corporate clients in a number of industries, including automotive, natural resources, manufacturing, health care, non-profit, employee staffing, housing compliance, communications, federal contracting, construction, and financial services. She has helped to obtain favorable resolution for matters at all stages, from dismissal on the initial pleadings to a defense jury verdict. View articles by Anne

Happy New Year! We hope you had a joyful holiday season and your 2018 is off to a good start.

The Taxman Cometh for Sexual Harassment SettlementsAs you know, over the last few months, sexual harassment allegations have surfaced all over the place, from Hollywood to Capitol Hill to the Today Show. The hot topic of harassment in the workplace has garnered attention from employers and legislators alike, and it has prompted Senators to amend the new tax bill in an effort to curb nondisclosure agreements in sexual harassment settlements.

The Amendment Provides:

(q) PAYMENTS RELATED TO SEXUAL HARASSMENT AND SEXUAL ABUSE. — No deduction shall be allowed under this chapter for — (1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or (2) attorney’s fees related to such a settlement or payment.

The amendment’s proponents insist that it eliminates protection for sexual offenders in the tax code. Its critics, however, are skeptical that the amendment will make a difference, and they believe employers will still opt for the nondisclosure agreement. Additionally, another portion of the tax bill eliminates a plaintiff’s ability to deduct legal fees, so critics believe it penalizes accusers more than offenders.

This provision of the tax bill became effective on December 22, 2017, so employers (and individuals) that paid or incurred sexual harassment-related settlement payments prior to that date will generally still be able to deduct those payments as business expenses when they file tax returns in the next few months.

As new laws often do, the amendment raises more questions than it answers. It refers to settlements or payments “related” to sexual harassment or abuse. Employment lawsuits often involve kitchen sink claims—the same plaintiff may allege sexual harassment alongside medical leave interference or wage-and-hour violations. The amendment provides no guidance on deducting such expenses if only part of the settlement relates to a sexual harassment claim.

Regardless of the financial implications of the tax bill amendment, its inclusion in the tax bill marks a new era where sexual harassment claims are more prevalent and are getting closer attention from courts and the media. Rather than focusing on the tax write-off after a claim is raised, employers should focus on preventing these claims altogether by updating their policies, training, and reporting procedures.

Happy Thanksgiving and the Many Things for Which We Are ThankfulBefore everyone gets out of the office to their various homes and families to celebrate the holiday, we wanted to review the year and count our blessings. Not only are we thankful that our families and colleagues in our Houston and Tampa offices weathered the storms safely, we are also thankful for the following legal stuff:

1. The DOL is not about to change the wage and hour laws.

Does anyone else remember the panicked calls last Thanksgiving week when the Texas judge put the brakes on a regulation that was going to increase the salary basis test? We are all thankful that will not happen this year. Although we still don’t know what, if anything, will happen on that front we will keep you posted.

2. Finally a court has said the ADA is not about leave.

Despite the EEOC’s insistence otherwise, the Seventh Circuit stepped up to the plate and said extended leave is not a reasonable accommodation under the ADA. As we all know, you still need to consider if a limited amount of leave will get the employee back to work but we are thankful that we have some new case law on this front.

3. Harvey Weinstein doesn’t work for us.

This story has horrified many but given all employers a wake-up call. We are grateful for the opportunity to train more people and try to make America a better place to work.

4. The NLRB has a new direction.

Maybe the new Board won’t tell employees that it is okay to swear at your boss on Facebook or nitpick employer policies quite so much.

5. You’re not going to be the employer of someone else’s employees.

DOL has withdrawn its prior guidance on independent contractor and joint employer liability, and Alabama’s Rep. Byrne has introduced a bill to “Save Our Small Businesses.”

6. Legalized marijuana has made questions about drug policies so much more interesting.

Even though it isn’t legal in many states, the fact that employees can legally ingest marijuana many places (including Florida) and take their chances on the looming random drug screen has spiced up our lives. While the law will continue to develop in this area, we are grateful for the very interesting questions we have received.

7. People other than our mothers read this blog.

(Okay, some of our moms are reading and might boost the numbers a little bit.) Since 2016, we have published more than 130 articles and had more than 230,000 reads, according to aggregate reports from Lexology and JD Supra. We have received recognition in The Expert Institute’s Best Legal Blog 2017 competition, the ABA Journal’s Web 100 Ranking, and numerous quotations in other publications. We enjoy bringing you this information and love it when you tell us it is helpful or tweet it to someone else.

Happy Thanksgiving from the Labor & Employment Insights blog team!

Alabama Employers Take Note – Birmingham Joins Ranks of Cities with an Anti-Discrimination OrdinanceLast month, the Birmingham City Council passed an ordinance criminalizing discrimination in education, housing, employment, and public accommodations. The ordinance not only prohibits discrimination based on the federally protected categories of race, sex, national origin, and disability, but it also recognizes familial status (i.e., having minor children), sexual orientation, and gender identity as protected categories. Additionally, the ordinance creates a new Human Rights Commission to handle discrimination complaints. Members of the commission will include the police chief, fire chief, ADA compliance director, a city council staff member, city council district appointees, and representatives from other local organizations.

What the Ordinance Provides

An individual can file a discrimination complaint by seeking a warrant or summons from a magistrate in the Birmingham Municipal Court. The magistrate will refer the complaint to the new Human Rights Commission to investigate and attempt to conciliate the complaint. If the commission does not resolve the matter, it then will go to trial in the municipal court. If found guilty, a business may face a $500 maximum fine. Although that remedy is insignificant relative to damages available under the federal anti-discrimination statutes (backpay, reinstatement, potentially uncapped damages), employers should keep in mind that a plaintiff in federal court could point to a prior municipal court ruling against an employer as evidence of discrimination. Weighing that possibility and also considering the near certainty that an employer would spend more than $500 defending a municipal court claim, employers should look to resolve such claims swiftly.

When Does It Take Effect?

Birmingham’s mayor must sign the ordinance for it to take effect, and that has not yet happened. That task apparently was moved to the backburner after Birmingham’s incumbent mayor, William Bell, lost to opponent Randall Woodfin in an October 3 runoff. Both Bell and Woodfin have expressed support for the ordinance, so we can expect that one of them will sign it into law at some point. Woodfin plans to take office on November 28.

Even assuming the mayor signs the ordinance, the Alabama State Legislature could possibly challenge it. The legislature is not in session again until early 2018 and has not hinted at opening a special session. Legislators are perhaps staying quiet on the issue while Birmingham and Huntsville pursue bids for Amazon’s second headquarters, in light of North Carolina’s recent economic backlash over the state legislature striking down Charlotte’s transgender bathroom ordinance.

Lastly, the city council president who spearheaded the ordinance lost his seat in a runoff shortly after its enactment, and it remains to be seen whether the new city council will follow through on getting the mayor’s signature and creating the new Human Rights Commission.

So, not surprisingly, the new ordinance raises more questions than it provides answers — employers should stay tuned for further developments.