When Your Boss Calls You “Wifey”: Key Legal Updates in Sexual Harassment Law

A legal department leader recently asked whether the standard for sexual harassment has changed and if an employee could claim her boss harassed her by nicknaming her “wifey” and referring to her as his “work wife.” 

Let’s start with the basics: 

What constitutes sexual harassment?

Workplace sexual harassment usually presents itself in two ways: When a supervisor conditions an employment decision on a sexual favor and/or when an employee experiences unwelcome and offensive conduct by another employee in the workplace based on sex (e.g., sexual jokes, comments about one’s physical appearance, unwanted touching).

To be legally actionable harassment, the conduct must be unwanted and offensive. The “offensive” element must be both subjectively offensive in that the subject employee feels offended by the conduct and objectively offensive in that a reasonable person would find the employee offensive. 

Most states (and the federal government) add another element: The conduct must be severe or pervasive. Case law has broadly defined what constitutes “severe” conduct, and it’s usually conduct that only has to occur once to rise to the level of severity. For example, groping and genital exposure in the workplace are deemed severe enough that they do not have to happen more than once to constitute a sexually charged hostile environment. 

“Pervasive” conduct is behavior that is not deemed severe but that, happening repeatedly, makes an employee feel uncomfortable in the work environment. For example, frequent comments about the fit of one’s clothes, or perhaps calling someone “wifey” or referring to her as your “work wife.” 

Even if the conduct doesn’t meet the definition of severe or pervasive, it’s crucial for legal departments overseeing human resources to intervene and resolve inappropriate conduct early on. If left unaddressed, a single inappropriate sexual joke can foster a culture of tolerance for such remarks, potentially leading to legally actionable claims. 

Every company needs to conduct harassment training for employees annually. This is not just a legal requirement, but a crucial step in creating a safe and respectful work environment. Typically, when faced with an Equal Employment Opportunity Commission (EEOC) charge involving harassment allegations, the first thing the EEOC asks for is the company’s anti-harassment policies and annual training materials.

So, What’s New, Legally? 

Settlements Are No Longer Tax Deductible: The Tax Cuts and Jobs Act of 2018 aimed to deter companies from including non-disclosure provisions in agreements settling sexual harassment claims. The Act states that companies cannot take a business deduction for any settlement or payment (including attorneys’ fees) related to sexual harassment or sexual abuse if it is subject to a nondisclosure agreement. This means companies must choose between foregoing the tax deduction in favor of a non-disclosure agreement, or NDA, or foregoing the NDA in favor of a tax deduction. Companies may also want to attempt breaking down the settlement into two separate agreements when the allegations involve sexual harassment allegations in conjunction with non-sex-based allegations.

Arbitration Is No Longer Mandatory: For companies using arbitration agreements, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 made it so that employees who enter into pre-dispute arbitration agreements, such as at hire or in employment agreements, can choose to take their sexual harassment claims to court instead of arbitration. 

Courts are conflicted on how to apply this new law. Some courts find that if an employee alleges sexual harassment in conjunction with other claims, such as wage or race-based claims, the employee can bring all claims to court. In contrast, others have found only the sexual harassment claims are exempted from arbitration, leaving the employee to explore two different forums for her claims. Recently, some courts have grappled with whether gender-based harassment, such as an employee claiming a hostile environment based on gender, fits within the term “sexual harassment” under the Act. 

Companies will want to ensure their arbitration provisions are up to date and set clear expectations on the types of exempted claims to ensure their provisions remain enforceable. A skilled employment law attorney can craft a compliant arbitration agreement that requires all claims, even if subject to this new law, to be mediated before the employee files suit and, in some states, require a jury trial waiver.

The EEOC May Not Enforce Transgender-Based Harassment: Within his first week of office, President Donald Trump issued Executive Order 14168, Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government, which directed federal agencies, like the EEOC, only to recognize two sexes and no longer recognize the concept of gender identity. In turn, acting EEOC Chair Andrew Lucas has already taken measures consistent with the directive. 

While Lucas cannot yet rescind existing EEOC guidance because the EEOC lacks a quorum, he has stated he is opposed to enforcing existing EEOC guidance that misgendering employees, refusing to use chosen pronouns, and not allowing employees to use a bathroom consistent with their gender identity constituted sex-based harassment. While the EEOC may not enforce such rights, employers must still prohibit harassment in the workplace against transgender or non-binary employees because the Supreme Court has held that such conduct is a violation of Title VII of the Civil Rights Act.

While the legal definition of sexual harassment has largely remained the same over the years, in-house lawyers must stay abreast of state and federal laws that affect their risk analysis. Updating anti-harassment policies and arbitration provisions and training managers on responding early to unwelcome and offensive conduct are key steps in maintaining a safe work environment.