[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5842 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 5842
To deter, prevent, reduce, and respond to harassment in the workplace,
including sexual harassment, sexual assault, and harassment based on
protected categories; and to amend the Internal Revenue Code of 1986 to
modify the tax treatment of amounts related to employment
discrimination and harassment in the workplace, including sexual
harassment, sexual assault, and harassment based on protected
categories.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 3, 2021
Ms. Lois Frankel of Florida (for herself, Mr. Katko, Ms. Blunt
Rochester, Mr. Fitzpatrick, Mr. Nadler, Ms. Underwood, Mrs. Axne, Mr.
Blumenauer, Ms. Bonamici, Mr. Bowman, Mr. Carson, Mr. Casten, Ms.
Castor of Florida, Ms. Chu, Ms. Clark of Massachusetts, Ms. Clarke of
New York, Mr. Cohen, Mr. Cooper, Mr. Crist, Mr. Danny K. Davis of
Illinois, Ms. DeLauro, Mrs. Demings, Mr. DeSaulnier, Mrs. Dingell, Ms.
Escobar, Mr. Espaillat, Mr. Foster, Ms. Garcia of Texas, Mr. Grijalva,
Mrs. Hayes, Ms. Jacobs of California, Mr. Johnson of Georgia, Ms.
Kaptur, Mr. Kilmer, Mrs. Kirkpatrick, Ms. Kuster, Mrs. Lawrence, Mr.
Lawson of Florida, Ms. Lee of California, Mr. Lowenthal, Mr. Lynch,
Mrs. Carolyn B. Maloney of New York, Ms. Manning, Ms. McCollum, Mr.
McGovern, Ms. Meng, Ms. Moore of Wisconsin, Mrs. Napolitano, Ms.
Newman, Ms. Norton, Ms. Pingree, Mr. Raskin, Miss Rice of New York, Ms.
Roybal-Allard, Ms. Scanlon, Ms. Schakowsky, Ms. Speier, Ms. Strickland,
Ms. Tlaib, Mrs. Trahan, Mr. Veasey, Ms. Wasserman Schultz, Mrs. Watson
Coleman, Mr. Welch, Ms. Wild, and Mr. Rush) introduced the following
bill; which was referred to the Committee on Education and Labor, and
in addition to the Committees on Ways and Means, the Judiciary, House
Administration, Oversight and Reform, and Financial Services, for a
period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To deter, prevent, reduce, and respond to harassment in the workplace,
including sexual harassment, sexual assault, and harassment based on
protected categories; and to amend the Internal Revenue Code of 1986 to
modify the tax treatment of amounts related to employment
discrimination and harassment in the workplace, including sexual
harassment, sexual assault, and harassment based on protected
categories.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Ending the Monopoly of Power Over
Workplace Harassment through Education and Reporting Act'' or the
``EMPOWER Act''.
TITLE I--PREVENTING AND RESPONDING TO WORKPLACE HARASSMENT
SEC. 101. PURPOSE AND AUTHORITY.
It is the purpose of this title, through the exercise by Congress
of its power to regulate commerce among the several States, to deter,
prevent, reduce, and respond to harassment in the workplace, including
sexual harassment, sexual assault, and harassment based on other
protected categories.
SEC. 102. DEFINITIONS.
In this title:
(1) Applicant.--The term ``applicant'' means an applicant
for employment as an employee, independent contractor, or
outside worker.
(2) Charge of discrimination.--The term ``Charge of
Discrimination'' means a charge or complaint of discrimination
filed pursuant to section 706 of the Civil Rights Act of 1964
(42 U.S.C. 2000e-5), section 7 of the Age Discrimination in
Employment Act of 1967 (29 U.S.C. 626), section 107 of the
Americans with Disabilities Act of 1990 (42 U.S.C. 12117), or
section 207 of the Genetic Information Nondiscrimination Act of
2008 (42 U.S.C. 2000ff-6).
(3) Commission.--The term ``Commission'' means the Equal
Employment Opportunity Commission.
(4) Employee.--The term ``employee'' means--
(A) an individual employed by an employer described
in paragraph (5), including an outside worker in such
individual's office or place of employment;
(B) an employee to which section 703, 704, or
717(a) of the Civil Rights Act of 1964 (42 U.S.C.
2000e-2, 2000e-3, 2000e-16(a)) applies, including an
outside worker in such an employee's office or place of
employment, section 4 of the Age Discrimination in
Employment Act of 1967 (29 U.S.C. 623), section 102 of
the Americans with Disabilities Act of 1990 (42 U.S.C.
12112), or sections 202, 203, and 204 of the Genetic
Information Nondiscrimination Act of 2008 (42 U.S.C.
2000ff-1, 2000ff-2, 2000ff-3);
(C) a State employee to which section 302(a) of the
Government Employee Rights Act of 1991 (42 U.S.C.
2000e-16b(a)) applies, including an outside worker in
such a State employee's office or place of employment;
or
(D) a covered employee, as defined in section 101
of the Congressional Accountability Act of 1995 (2
U.S.C. 1301) or section 411(c) of title 3, United
States Code, including an outside worker in such a
covered employee's office or place of employment.
(5) Employer.--The term ``employer'' means--
(A) a person engaged in an industry affecting
commerce, and any agent of such a person;
(B) an entity to which section 703, 704, or 717(a)
of the Civil Rights Act of 1964 applies, sections 4 and
15 of the Age Discrimination in Employment Act of 1967
(29 U.S.C. 623, 633a), section 102 of the Americans
with Disabilities Act of 1990 (42 U.S.C. 12112), or
sections 202, 203, and 204 of the Genetic Information
Nondiscrimination Act of 2008 (42 U.S.C. 2000ff-1,
2000ff-2, 2000ff-3);
(C) an employing authority to which section
302(a)(1) of the Government Employee Rights Act of 1991
applies; or
(D) an employing office, as defined in section 101
of the Congressional Accountability Act of 1995 or
section 411(c) of title 3, United States Code.
(6) Fair employment practices agencies.--The term ``fair
employment practices agencies'' means State and local agencies
with the authority to enforce laws or regulations to prohibit
discrimination in employment, to grant or seek relief from
discrimination, or to institute criminal proceedings.
(7) Independent contractor.--The term ``independent
contractor'' means an individual who, with respect to an
employer, is a contractor based on the common law of agency.
(8) Law enforcement agency.--The term ``law enforcement
agency'' means a government agency with criminal or civil law
enforcement powers, which may include a government agency with
regulatory or licensing authority.
(9) Nondisclosure clause.--The term ``nondisclosure
clause'' means a provision in a contract or agreement
establishing that the parties to the contract or agreement
agree not to disclose information covered by the terms and
conditions of the contract or agreement.
(10) Nondisparagement clause.--The term ``nondisparagement
clause'' means a provision in a contract or agreement requiring
one or more parties to the contract or agreement not to make
negative statements about the other.
(11) Outside worker.--The term ``outside worker'' means--
(A) a temporary worker hired through an employment
agency (as defined in section 701 of the Civil Rights
Act of 1964 (42 U.S.C. 2000e)) to provide services to
an employer pursuant to an agreement between the
employment agency and the employer, section 11 of the
Age Discrimination in Employment Act of 1967 (29 U.S.C.
630), section 101 of the Americans with Disabilities
Act of 1990 (42 U.S.C. 12111), or section 201 of the
Genetic Information Nondiscrimination Act of 2008 (42
U.S.C. 2000ff)'';
(B) an independent contractor for an employer or a
subcontractor thereof; or
(C) an intern or volunteer, whether paid or unpaid,
for an employer.
(12) Sexual assault.--The term ``sexual assault'' means any
nonconsensual sexual act proscribed by Federal, tribal, or
State law, including such an act that occurs when the victim
lacks capacity to consent.
(13) Subcontractor.--The term ``subcontractor'' means any
employer having a contract with a prime contractor or another
subcontractor calling for supplies or services required for the
performance of a contract or a government contract.
(14) Workplace harassment.--The term ``workplace
harassment'' means unwelcome or offensive conduct based on sex
(including such conduct based on sexual orientation, gender
identity, and pregnancy), race, color, national origin,
disability, age, religion, or genetic information including
conduct that occurs in-person or through an electronic medium
(which may include social media), in a work or work-related
context, which affects any term, condition, or privilege of
employment.
SEC. 103. PROHIBITING NONDISPARAGEMENT AND NONDISCLOSURE CLAUSES THAT
COVER WORKPLACE HARASSMENT, INCLUDING SEXUAL HARASSMENT.
(a) Unlawful Practices.--
(1) Prohibition on workplace harassment nondisclosure
clause.--Subject to subsection (b)(1), it shall be an unlawful
practice for an employer to enter into a contract or agreement
with an employee or applicant, as a condition of employment,
promotion, compensation, benefits, or change in employment
status or contractual relationship, or as a term, condition, or
privilege of employment, if that contract or agreement contains
a nondisparagement or nondisclosure clause that covers
workplace harassment, including sexual harassment or
retaliation for reporting, resisting, opposing, or otherwise
participating in a workplace harassment proceeding.
(2) Prohibition on enforcement.--Notwithstanding any other
provision of law, it shall be an unlawful practice and
otherwise unlawful for an employer to enforce or attempt to
enforce a nondisparagement clause or nondisclosure clause
described in paragraph (1).
(b) Settlement or Separation Agreements.--
(1) In general.--The provisions of subsection (a) do not
apply to a nondisclosure clause or nondisparagement clause
contained in a settlement agreement or separation agreement
that resolves legal claims or disputes when--
(A) such legal claims accrued or such disputes
arose before the settlement agreement or separation
agreement was executed; and
(B) such clauses are mutually agreed upon and
mutually benefit both the employer and employee or
applicant.
(2) Unlawful practice.--It shall be an unlawful practice
for an employer to unilaterally include a nondisclosure clause
or a nondisparagement clause that solely benefits the employer
in a separation or settlement agreement.
(c) Right To Report Reserved.--Notwithstanding signing (before or
after the effective date of this title) any nondisparagement or
nondisclosure clause including a clause referred to in subsection
(a)(1), an employee or applicant retains any right that person would
otherwise have had to report a concern about workplace harassment,
including sexual harassment or another violation of the law to the
Commission, another Federal agency (including an office of the
legislative or judicial branch), a State or local fair employment
practices agency or any State or local agency, or a law enforcement
agency, and any right that person would otherwise have had to bring an
action in a court of the United States.
(d) Enforcement.--
(1) Enforcement powers.--With respect to the administration
and enforcement of this section in the case of a claim alleged
by an employee or applicant for a violation of this section--
(A) the Commission shall have the same powers as
the Commission has to administer and enforce--
(i) title VII of the Civil Rights Act of
1964 (42 U.S.C. 2000e et seq.);
(ii) the Age Discrimination in Employment
Act of 1967 (29 U.S.C. 621 et seq.);
(iii) titles I and V of the Americans with
Disabilities Act of 1990 (42 U.S.C. 12101 et
seq.);
(iv) title II of the Genetic Information
Nondiscrimination Act of 2008 (42 U.S.C. 2000ff
et seq.); or
(v) sections 302 and 304 of the Government
Employee Rights Act of 1991 (42 U.S.C. 2000e-
16b and 2000e-16c),
in the case of a claim alleged by an employee or
applicant for a violation of the law specified in
respective clause of this subparagraph;
(B) the Librarian of Congress shall have the same
powers as the Librarian of Congress has to administer
and enforce title VII of the Civil Rights Act of 1964
(42 U.S.C. 2000e et seq.) in the case of a claim
alleged by an employee or applicant for a violation of
such title;
(C) the Board (as defined in section 101 of the
Congressional Accountability Act of 1995 (2 U.S.C.
1301)) shall have the same powers as the Board has to
administer and enforce the Congressional Accountability
Act of 1995 (2 U.S.C. 1301 et seq.) in the case of a
claim alleged by an employee or applicant for a
violation of section 201(a)(1) of such Act (2 U.S.C.
1311(a)(1));
(D) the Attorney General shall have the same powers
as the Attorney General has to administer and enforce--
(i) title VII of the Civil Rights Act of
1964 (42 U.S.C. 2000e et seq.); or
(ii) sections 302 and 304 of the Government
Employee Rights Act of 1991 (42 U.S.C. 2000e-
16b and 2000e-16c),
in the case of a claim alleged by an employee or
applicant for a violation of the law specified in
respective clause of this subparagraph;
(E) the President, the Commission, and the Merit
Systems Protection Board shall have the same powers as
the President, the Commission, and the Board,
respectively, have to administer and enforce chapter 5
of title 3, United States Code, in the case of a claim
alleged by an employee or applicant for a violation of
section 411 of such title;
(F) the Commission shall have the same powers as
described in subparagraph (A) to administer and enforce
a claim by any employee or applicant who is not
otherwise able to seek remedy for a claim through an
enforcement entity described in subparagraph (A)
through (E); and
(G) a court of the United States shall have the
same jurisdiction and powers as the court has to
enforce--
(i) title VII of the Civil Rights Act of
1964 (42 U.S.C. 2000e et seq.) in the case of a
claim alleged by an employee or applicant for a
violation of such title or in the case of a
claim described in subparagraph (F);
(ii) the Age Discrimination in Employment
Act of 1967 (29 U.S.C. 621 et seq.);
(iii) titles I and V of the Americans with
Disabilities Act of 1990 (42 U.S.C. 12101 et
seq.);
(iv) title II of the Genetic Information
Nondiscrimination Act of 2008 (42 U.S.C. 2000ff
et seq.);
(v) sections 302 and 304 of the Government
Employee Rights Act of 1991 (42 U.S.C. 2000e-
16b and 2000e-16c) in the case of a claim
alleged by an employee or applicant for a
violation of section 302(a)(1) of such Act (42
U.S.C. 2000e-16b(a)(1));
(vi) the Congressional Accountability Act
of 1995 (2 U.S.C. 1301 et seq.) in the case of
a claim alleged by an employee or applicant for
a violation of section 201(a)(1) of such Act (2
U.S.C. 1311(a)(1)); and
(vii) chapter 5 of title 3, United States
Code, in the case of a claim alleged by an
employee or applicant for a violation of
section 411 of such title.
(2) Procedures and remedies.--The procedures and remedies
applicable to a claim alleged by an employee or applicant for a
violation of this section are--
(A) the procedures and remedies applicable for a
violation of title VII of the Civil Rights Act of 1964
(42 U.S.C. 2000e et seq.) in the case of a claim
alleged by an employee or applicant for a violation of
such title or in the case of a claim described in
paragraph (1)(F);
(B) the Age Discrimination in Employment Act of
1967 (29 U.S.C. 621 et seq.);
(C) titles I and V of the Americans with
Disabilities Act of 1990 (42 U.S.C. 12101 et seq.);
(D) title II of the Genetic Information
Nondiscrimination Act of 2008 (42 U.S.C. 2000ff et
seq.);
(E) the procedures and remedies applicable for a
violation of section 302(a)(1) of the Government
Employee Rights Act of 1991 (42 U.S.C. 2000e-16b(a)(1))
in the case of a claim alleged by an employee or
applicant for a violation of such section;
(F) the procedures and remedies applicable for a
violation of section 201(a)(1) of the Congressional
Accountability Act of 1995 (2 U.S.C. 1311(a)(1)) in the
case of a claim alleged by an employee or applicant for
a violation of such section; and
(G) the procedures and remedies applicable for a
violation of section 411 of title 3, United States
Code, in the case of a claim alleged by an employee or
applicant for a violation of such section.
(3) Other applicable provisions.--With respect to a claim
alleged by a covered employee (as defined in section 101 of the
Congressional Accountability Act of 1995 (2 U.S.C. 1301)) for a
violation of this section, title III of the Congressional
Accountability Act of 1995 (2 U.S.C. 1381 et seq.) shall apply
in the same manner as such title applies with respect to a
claim alleged by such a covered employee for a violation of
section 201(a)(1) of such Act (2 U.S.C. 1311(a)(1)).
(e) Regulations.--
(1) In general.--Except as provided in paragraphs (2), (3),
and (4), the Commission shall have authority to issue
regulations to carry out this section.
(2) Librarian of congress.--The Librarian of Congress shall
have authority to issue regulations to carry out this section
with respect to employees or applicants for employment of the
Library of Congress.
(3) Board.--The Board referred to in subsection (d)(1)(C)
shall have authority to issue regulations to carry out this
section, in accordance with section 304 of the Congressional
Accountability Act of 1995 (2 U.S.C. 1384), with respect to
covered employees, as defined in section 101 of such Act (2
U.S.C. 1301).
(4) President.--The President shall have authority to issue
regulations to carry out this section with respect to covered
employees, as defined in section 411(c) of title 3, United
States Code, and applicants for employment as such employees.
(f) State and Federal Immunity.--
(1) Abrogation of state immunity.--A State shall not be
immune under the 11th Amendment to the Constitution from a suit
brought in a Federal court of competent jurisdiction for a
violation of this section.
(2) Waiver of state immunity.--
(A) In general.--
(i) Waiver.--A State's receipt or use of
Federal financial assistance for any program or
activity of a State shall constitute a waiver
of sovereign immunity, under the 11th Amendment
to the Constitution or otherwise, to a suit
brought by an employee or applicant for
employment of that program or activity under
this section for a remedy authorized under
subsection (d).
(ii) Definition.--In this paragraph, the
term ``program or activity'' has the meaning
given the term in section 606 of the Civil
Rights Act of 1964 (42 U.S.C. 2000d-4a).
(B) Effective date.--With respect to a particular
program or activity, subparagraph (A) applies to
conduct occurring on or after the day, after the date
of enactment of this Act, on which a State first
receives or uses Federal financial assistance for that
program or activity.
(3) Remedies against state officials.--An official of a
State may be sued in the official capacity of the official by
any employee or applicant for employment who has complied with
the applicable procedures of subsection (d), for equitable
relief that is authorized under this section. In such a suit
the court may award to the prevailing party those costs
authorized by section 722 of the Revised Statutes (42 U.S.C.
1988).
(4) Remedies against the united states and the states.--
Notwithstanding any other provision of this title, in an action
or administrative proceeding against the United States or a
State for a violation of this section, remedies (including
remedies at law and in equity, and interest) are available for
the violation to the same extent as the remedies are available
for a violation of title VII of the Civil Rights Act of 1964
(42 U.S.C. 2000e et seq.) by a private entity, except that--
(A) punitive damages are not available; and
(B) compensatory damages are available to the
extent specified in section 1977A(b) of the Revised
Statutes (42 U.S.C. 1981a(b)).
SEC. 104. SEC FILINGS AND MATERIAL DISCLOSURES AT PUBLIC COMPANIES.
(a) Definitions.--In this section--
(1) the term ``Form 10-K'' means the form described in
section 249.310 of title 17, Code of Federal Regulations, or
any successor regulation; and
(2) the term ``issuer'' has the meaning given the term in
section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)).
(b) Findings.--Congress finds that--
(1) shareholders and the public should know whether
corporations--
(A) are expending company funds to resolve, settle,
or litigate claims of workplace harassment, including
sexual harassment; and
(B) along with the executives and managers of those
corporations--
(i) are complying with prohibitions against
workplace harassment, including sexual
harassment; and
(ii) facilitate a culture of silence,
disrespect, intimidation, and abuse that
negatively impacts the health and safety of the
workers of those corporations and the value of
those corporations; and
(2) the requirements of this section will--
(A) establish necessary transparency and
accountability; and
(B) provide an incentive for corporations to--
(i) promptly address workplace harassment,
including sexual harassment, as that misconduct
occurs; and
(ii) foster a culture in which workplace
harassment is not protected and does not occur.
(c) Information Required.--Not later than 1 year after the date of
enactment of this Act, the Securities and Exchange Commission shall
promulgate a regulation that requires any issuer that is required to
submit annually a report using Form 10-K to include in any such
submission--
(1) during the then most recent 5-year period covered by
the submission--
(A) with respect to workplace harassment, including
sexual harassment, and retaliation for reporting,
resisting, opposing, assisting, or otherwise
participating in a workplace harassment proceeding--
(i) the number of settlements reached by
the issuer as a signatory or when the issuer is
a beneficiary of a release of claims; and
(ii) whether any judgments or awards
(including awards through arbitration or
administrative proceedings) were entered
against the issuer in part or in whole, or any
payments made in connection with a release of
claims; and
(B) the total amount paid by the issuer or another
party as a result of--
(i) the settlements described in
subparagraph (A)(i); and
(ii) the judgments described in
subparagraph (A)(ii); and
(2) information regarding whether, in the aggregate,
including the period covered by the submission, there have been
three or more settlements reached by, or judgments against, the
issuer with respect to workplace harassment, including sexual
harassment, or retaliation for reporting, resisting, opposing,
assisting, or otherwise participating in a workplace harassment
proceeding that relate to a particular individual employed by
the issuer, without identifying that individual by name.
SEC. 105. PROFESSIONAL TRAINING, INCLUDING BYSTANDER TRAINING, AND
PUBLIC EDUCATION CAMPAIGNS.
(a) Commission Authority.--The Commission shall have the authority
to--
(1) reasonably adjust the fees the Commission charges for
any education, technical assistance, or training the Commission
offers in accordance with section 705(j)(1) of the Civil Rights
Act of 1964 (42 U.S.C. 2000e-4(j)(1));
(2) use the materials developed by the Commission for any
education, technical assistance, or training offered by the
Commission in accordance with section 705(j)(1) of the Civil
Rights Act of 1964 in any education and outreach activities
carried out by the Commission; and
(3) use funds from the EEOC Education, Technical
Assistance, and Training Revolving Fund, established under
section 705(k) of the Civil Rights Act of 1964, to pay the full
salaries of any Commission employees that develop and
administer any education, technical assistance, or training
programs offered by the Commission.
(b) Workplace Training.--
(1) In general.--The Commission shall provide for the
development and dissemination of workplace training programs
and information regarding workplace harassment, including
sexual harassment.
(2) Contents of training.--The training provided by the
Commission under this subsection to managers and nonmanagers
shall be consistent with the findings of the Commission, on
matters including--
(A) what constitutes workplace harassment,
including sexual harassment;
(B) the rights of individuals with respect to
workplace harassment and how to report workplace
harassment;
(C) how individuals, including bystanders, who
encounter workplace harassment can intervene or report
the harassment; and
(D) how employers and managers can prevent
workplace harassment, including sexual harassment, from
occurring in the workplace.
(3) Contents of information.--In providing information
under this subsection, the Commission shall--
(A) prepare and distribute information that is
consistent with the findings of the Commission; and
(B) develop and disseminate a public service
advertisement campaign that distributes information
with respect to the matters described in paragraph (2).
(c) Effective Date.--This section shall not take effect in any
fiscal year for which less than $1,500,000 is appropriated to carry out
this section.
TITLE II--MODIFICATION OF TAX TREATMENT OF AMOUNTS RELATED TO
EMPLOYMENT DISCRIMINATION AND WORKPLACE HARASSMENT
SEC. 201. TAX TREATMENT OF AMOUNTS RELATED TO JUDGMENTS.
(a) Denial of Deduction.--
(1) In general.--Part IX of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 is amended by adding at the
end the following new section:
``SEC. 280I. AMOUNTS RELATED TO JUDGMENTS WITH RESPECT TO WORKPLACE
HARASSMENT, INCLUDING SEXUAL HARASSMENT.
``No deduction shall be allowed under this chapter for amounts paid
or incurred by the taxpayer--
``(1) pursuant to any judgment or award in litigation
related to workplace harassment, including sexual harassment,
or
``(2) for expenses and attorney's fees in connection with
the litigation resulting in the judgment or award described in
paragraph (1) (other than expenses or attorney's fees paid by
the workplace harassment plaintiff or claimant), or for any
insurance covering the defense or liability of the underlying
claims with respect to such litigation.''.
(2) Clerical amendment.--The table of sections for part IX
of subchapter B of chapter 1 of such Code is amended by adding
at the end the following new item:
``Sec. 280I. Amounts related to judgments with respect to workplace
harassment, including sexual harassment.''.
(3) Conforming amendment.--Section 162 of such Code is
amended by striking subsection (q).
(4) Effective date.--The amendments made by this subsection
shall apply to amounts paid or incurred in taxable years
beginning after the date of the enactment of this Act.
(b) Exclusion From Income.--
(1) In general.--Part III of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 is amended by inserting after
section 139G the following new section:
``SEC. 139H. AMOUNTS RECEIVED IN CONNECTION WITH JUDGMENTS, AWARDS, AND
SETTLEMENTS WITH RESPECT TO WORKPLACE HARASSMENT.
``Gross income shall not include any amount received in connection
with a judgment or award in, or a settlement of--
``(1) a claim related to workplace harassment, including
sexual harassment or other unlawful discrimination, or
``(2) any other claim of unlawful discrimination (as
defined by section 62(e)).
The preceding sentence shall not include any employment discrimination
compensation to which section 1302 applies.''.
(2) Clerical amendment.--The table of sections for part III
of subchapter B of chapter 1 of such Code is amended by
inserting after the item relating to section 139G the following
new item:
``Sec. 139H. Amounts received in connection with judgments, awards, and
settlements with respect to workplace
harassment.''.
(3) Effective date.--The amendments made by this subsection
shall apply to amounts received in taxable years beginning
after the date of the enactment of this Act.
SEC. 202. LIMITATION ON TAX BASED ON INCOME AVERAGING FOR COMPENSATION
RECEIVED ON ACCOUNT OF CERTAIN UNLAWFUL EMPLOYMENT
DISCRIMINATION.
(a) In General.--Part I of subchapter Q of chapter 1 of the
Internal Revenue Code of 1986 (relating to income averaging) is amended
by adding at the end the following new section:
``SEC. 1302. INCOME FROM BACKPAY AND FRONTPAY RECEIVED ON ACCOUNT OF
CERTAIN UNLAWFUL EMPLOYMENT DISCRIMINATION.
``(a) General Rule.--If employment discrimination backpay or
frontpay is received by a taxpayer during a taxable year, the tax
imposed by this chapter for such taxable year shall not exceed the sum
of--
``(1) the tax which would be so imposed if--
``(A) no amount of such backpay or frontpay were
included in gross income for such year, and
``(B) no deduction were allowed for such year for
expenses (otherwise allowable as a deduction to the
taxpayer for such year) in connection with making or
prosecuting any claim of unlawful employment
discrimination by or on behalf of the taxpayer, plus
``(2) the product of--
``(A) the number of years in the backpay period and
frontpay period, and
``(B) the amount by which the tax determined under
paragraph (1) would increase if the amount on which
such tax is determined were increased by the average
annual net backpay and frontpay amount.
``(b) Definitions.--For purposes of this section--
``(1) Employment discrimination backpay or frontpay.--The
term `employment discrimination backpay or frontpay' means
backpay or frontpay receivable (whether as lump sums or
periodic payments) on account of a claim of unlawful employment
discrimination.
``(2) Unlawful employment discrimination.--The term
`unlawful employment discrimination' has the meaning provided
the term `unlawful discrimination' in section 62(e).
``(3) Backpay and frontpay.--The terms `backpay' and
`frontpay' mean amounts--
``(A) which are includible in gross income in the
taxable year as compensation which is attributable--
``(i) in the case of backpay, to services
performed, or that would have been performed
but for a claimed violation of law, as an
employee, former employee, or prospective
employee before such taxable year for the
taxpayer's employer, former employer, or
prospective employer, and
``(ii) in the case of frontpay, to
employment that would have been performed but
for a claimed violation of law, in a taxable
year or taxable years following the taxable
year, and
``(B) which are received on account of a judgment
or settlement resulting from a claim for a violation of
law.
``(4) Backpay period.--The term `backpay period' means the
period during which services are performed (or would have been
performed) to which backpay is attributable. If such period is
not equal to a whole number of taxable years, such period shall
be increased to the next highest number of whole taxable years.
``(5) Frontpay period.--The term `frontpay period' means
the period of foregone employment to which frontpay is
attributable. If such period is not equal to a whole number of
taxable years, such period shall be increased to the next
highest number of whole taxable years.
``(6) Average annual net backpay and frontpay amount.--The
term `average annual net backpay and frontpay amount' means the
amount equal to--
``(A) the excess of--
``(i) employment discrimination backpay and
frontpay, over
``(ii) the amount of deductions that would
have been allowable but for subsection
(a)(1)(B), divided by
``(B) the number of years in the backpay period and
frontpay period.''.
(b) Clerical Amendment.--The table of sections for part I of
subchapter Q of chapter 1 of the Internal Revenue Code of 1986 is
amended by inserting after section 1301 the following new item:
``Sec. 1302. Income from compensation received on account of certain
unlawful employment discrimination.''.
(c) Income Averaging Not To Increase Alternative Minimum Tax
Liability.--Section 55(c) of the Internal Revenue Code of 1986 is
amended by redesignating paragraph (3) as paragraph (4) and by
inserting after paragraph (2) the following new paragraph:
``(3) Coordination with income averaging for amounts
received on account of employment discrimination.--Solely for
purposes of this section, section 1302 shall not apply in
computing the regular tax liability.''.
(d) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred in taxable years beginning after the
date of the enactment of this Act.
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