New tax law creates catch-22 for sexual harassment settlements

One of the primary concerns addressed through the #MeToo movement is that claims of sexual harassment in the workplace are often settled discreetly and without scrutiny. For years, employers have resolved sexual harassment claims with a settlement payout in exchange for a general release of the company from all liability. The terms of the settlement would include a confidentiality or nondisclosure clause barring the employee from discussing the allegations or the settlement with others. In particularly egregious circumstances, this creates a culture of secrecy in which employees are kept in the dark about a supervisor's, owner's, or some other individual's past indiscretions. The recently enacted Tax Cuts and Jobs Act (TCJA) encourages employers not to cloak settlements with a nondisclosure or confidentiality clause.

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