Bill Reverses U.S. Supreme Court Discrimination Settlement Rulings

State lawmakers are considering legislation that reverses well-established U.S. Supreme Court precedent and case law related to workplace discrimination and harassment settlements.

CBIA’s John Blair notes that parts of SB 5, if not remedied, “will turn on its head the ways in which employers handle discrimination, harassment, and settlement agreements.”

Blair said Section 10(e) of the bill, which focuses on how employers handle discrimination and harassment cases, threatens to disrupt established standards of employer liability and the availability of affirmative defenses in hostile work environment cases. 

Under current law, employees must establish that the complaint of conduct was sufficiently “severe” and “pervasive” so as to alter their terms of employment.

The standard is intended to prevent employer liability in the case of minor workplace slights or insults.

Employer Liability

Additionally, under current law, employers may be able to avoid being held vicariously liable for a supervisor’s harassing conduct where an employer took reasonable steps to prevent the behavior (e.g., sexual harassment training) and provided avenues for employees to report misconduct but where the employee failed to do so.  

The language in the bill eliminates that defense by not requiring the employee to report the complaint of behavior before filing a charge or lawsuit.

The bill does not require an employee to report a complaint of behavior before filing a charge or lawsuit.

In addition, Section 10(f) creates a disincentive for any employer to enter into settlement agreements. 

This section prevents employers from including certain terms in their settlement agreements with employees—specifically, “no rehire” clauses. 

These are important to employers when settling cases as it provides protection against the situation where an employer settles a dispute with a former employee who then reapplies for employment, is not hired and alleges the decision is in retaliation for the prior complaint. 

Non-Disclosure Clauses

This section also prohibits non-disparagement and non-disclosure clauses in settlement agreements.

This would, for example, allow an employee to settle a dispute and immediately take to social media to disparage the company and its leaders, disclose the terms of the settlement, and the alleged behavior.

These types of clauses are routine and have been the standard for decades. 

The bill also prohibits non-disparagement and non-disclosure clauses in settlement agreements.

Section (g) restricts employers from requiring an employee to release and waive the right to pursue a complaint with the Connecticut Commission on Human Rights and Opportunities from obtaining recovery through those agencies as part of a negotiated settlement agreement.  

Under existing law, an employer may not restrict an employee from pursuing their rights through CHRO as part of a separation agreement.

However, employers can require that employees waive their right to obtain any personal recovery or damages via an agency action brought on their behalf. 

Outlier

As currently drafted, a proposed amendment allows an employee who settled a dispute to bring a claim through the state or federal agency and to obtain personal damages. 

This will serve as a significant disincentive for employers to enter into settlements with employees.

SB 5 makes Connecticut the only state with a law that does not mirror well-settled U.S. Supreme Court precedent.

SB 5 represents a significant problem for all Connecticut employers.

It makes Connecticut a sole outlier in comparison to all other states—the only state with a law that does not mirror well-settled U.S. Supreme Court precedent.

These sections should be extracted before the bill progresses further.

---

For more information, contact CBIA’s John Blair (860.244.1921).