Monthly Archives: March 2018

Employment Law Seminar: Get a Handle on Workplace Scandal

Employers and human resources professionals, does turning on the news today make you cringe more than usual? Do you feel prepared to guide your companies away from the front page and out of the news spotlight?

We invite you to join us for a high-energy, engaging program, in which the panel will provide you with strategies to help prevent, investigate, and defend sexual and other harassment claims. Additionally, the presenters will share insights regarding Employment Practices Liability Insurance (EPLI), the use of non-compete agreements and other restrictive covenants, including a push from Washington, a new interpretation of Florida law, as well as voluntary compliance and litigation issues. The session will also address the legal landscape surrounding the gender pay gap.

PRESENTATION TOPICS

  • Harassment Prevention – Let’s Talk About Sexual Harassment, Baby
    Amie Remington, LandrumHR
  • Non-Compete Agreements – White House Initiative, Florida Law
    Interpretation, Voluntary Compliance and Legal Enforcement
    Gail Farb, Attorney, Williams Parker Harrison Dietz & Getzen
  • Gender Pay Gap Legal Landscape – Laws and Litigation
    Jennifer Fowler-Hermes, Attorney, Williams Parker Harrison Dietz & Getzen
  • Employment Practices Liability Insurance (EPLI)
    Pat Del Medico, Chief Operating Officer, Al Purmort Insurance

DATE AND TIME

Wed, April 18, 2018
8:00 AM – 11:30 AM EDT
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LOCATION

The Francis
1289 North Palm Avenue
Sarasota, FL 34236
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Click here for more information and to register. 

The Tax Act May Limit Resolutions of Sexual Harassment Complaints

One aspect of the new Tax Act (the Act) that has not been widely reported impacts employers that amicably resolve claims of sexual harassment. The provision denies tax deductions for any settlements, payouts, or attorneys’ fees related to sexual harassment or sexual abuse if such payments are subject to a non-disclosure or confidentiality agreement. Specifically, Section 162(q) to the Internal Revenue Code provides:

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 intent of this provision is to deter confidentiality provisions in settlements of harassment claims. It is unclear if this provision will actually have the desired impact. Companies may value the confidentiality provisions more than the tax deductions permitted in their absence, and thus continue to enter into confidential settlement agreements. Alternatively, this provision of the Act may end up hurting those bringing harassment claims. Alleged victims may want confidentiality provisions in order to avoid any publicity about their claims. However, by removing tax incentives for employers, an employer may reject a higher settlement amount or settlement of claims altogether.

Section 162(q) of the Act is bound to create confusion as to its applicability as it fails to define key terms. Namely, the Act fails to define “sexual harassment” or “sexual abuse,” both of which are pivotal to the application of the new provision. The Act also fails to contemplate how the provision is to be applied in settlement arrangements involving a variety of claims. Are the sex-based claims separable from a universal confidentiality covenant? Causing further confusion, the Act fails to explain what attorney’s fees are considered to be “related to such a settlement or payment.” Are these only the fees related to settlement negotiations, drafting the agreement, and execution or payment? Or does it extend to the claim’s inception and include the underlying investigation of the claims?

In light of the numerous questions raised by Section 162(q), employers should review their standard settlement agreements and practices and consider revising the breadth of any releases, nondisclosure provisions, or any representations or remedies.

Ryan P. Portugal
rportugal@williamsparker.com
941-329-6626