Categories
Recent Posts
- Meaningful Harassment Training
- Put it in Writting
- Get A Receipt: How to stop employee misappropriation
- Focus on the Wins
- HALLOWEEN EDITION: CUES TO CALL A LAWYER
Archives
- December 2023
- October 2023
- May 2023
- February 2023
- October 2022
- August 2022
- May 2022
- April 2022
- March 2022
- January 2022
- June 2021
- May 2021
- December 2020
- September 2020
- July 2020
- May 2020
- March 2020
- February 2020
- December 2019
- October 2019
- September 2019
- June 2019
- April 2019
- March 2019
- January 2019
- December 2018
- September 2018
- June 2018
- May 2018
- February 2018
- January 2018
- December 2017
- September 2017
- July 2017
- May 2017
- April 2017
- January 2017
- October 2016
- September 2016
- July 2016
- June 2016
- May 2016
- March 2016
- February 2016
- December 2015
- November 2015
- October 2015
- August 2015
- June 2015
- May 2015
- March 2015
- January 2015
- December 2014
- November 2014
- September 2014
- August 2014
- July 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014
- November 2013
- September 2013
- August 2013
- July 2013
- June 2013
- May 2013
- April 2013
- February 2013
- January 2013
- October 2012
- August 2012
- July 2012
- May 2012
- April 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- May 2011
- March 2011
- January 2011
- December 2010
- November 2010
- October 2010
Harassment, Taxes, and Confidentiality
Posted on March 12, 2019 in Consulting
The Tax Cuts and Jobs Act (TCJA), what normal people recall as President Trump’s tax law, contained a little know provision inspired by the Metoo# movement. Now, an employer cannot deduct as a business expense any settlement payment related to sexual harassment or sexual abuse if the settlement is subject to a nondisclosure agreement. Senator Menendez (D. NJ) proposed the amendment stating: “Corporations should not be allowed to write-off workplace sexual misconduct as a normal cost of doing business when it is far from normal. That is why I was proud to offer an amendment to the GOP tax bill that would both protect victims of sexual misconduct while ending the practice of taxpayers subsidizing the bad behavior of corporations or executives.” Perhaps Senator Menendez had good intentions, but his attempted quick fix missed the point. (It likely did not help that Senator Menendez’s corruption trial precluded him from being present for the vote on his amendment.) Here are my thoughts on what Congress should reconsider.
1. Sexual harassment should not have special status above race harassment.
I understand Congress’ desire to take a stand against sexual harassment. However, companies remain permitted to secretly settle claims of race harassment and deduct whatever expense they incur. I cannot rationalize a tax law that distinguishes (or should I say discriminates) between race and sex based harassment. I doubt anyone in Congress gave this much thought… unfortunately.
2. Confidentiality means less these days.
Companies should reconsider whether confidentiality provisions deliver the desired result. We live in a time of very few secrets. People access information off the Internet with ease. It takes very little time with a Google search to find how much Fox News and O’Reilly (secretly) paid to his various victims. Confidentiality clauses sometimes cause unintended harm. I learned that lesson early in my career. It was in the mid-1990s and I defended a man in his early 60s against a claim of sexual harassment brought by two women. The allegations never amounted to much and we settled the case on very favorable defense terms with a confidentiality provision. The payout was a total of $17,000 made by the company to a charity of the plaintiffs’ choice. The plaintiffs took home nothing. The next calendar year the same man came back to me accused by two different women again of sexual harassment. In deposition testimony, we learned that the second-suit plaintiffs heard a rumor that the prior litigants settled “confidentially” for $1.7 million. I always wondered if the second suit would have been filed if the settlement of the first suit had not been confidential.
3. Ban confidentiality provisions.
If Congress really wants companies held accountable for discrimination or harassment, it should adopt a law that bars confidentiality provisions in settlements of discrimination and harassment claims. Honestly, what good comes from a confidentiality provision? Just ask Michael Cohen.