Ending the Monopoly of Power Over Workplace Harassment through Education and Reporting Act

Bill: 117-hr-5842
Sponsor: full_name: Rep. Frankel, Lois [D-FL-21]
Introduced: 2021-11-03
Policy area: Labor and Employment
Latest action: action_date: 2021-11-03
text: 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.

Summaries:
action_date: 2021-11-03
action_desc: Introduced in House
text: <p><strong>Ending the Monopoly of Power Over Workplace Harassment through Education and Reporting Act or the EMPOWER Act</strong></p> <p>This bill makes it an unlawful labor practice for an employer to enter into, or attempt to enforce, a contract with an employee or job applicant that contains a nondisparagement or nondisclosure clause that covers workplace or sexual harassment, including retaliation for participating in a workplace harassment proceeding. The bill exempts certain settlement or separation agreements from such prohibition. </p> <p>The bill also requires the Securities and Exchange Commission to promulgate a regulation that requires any issuer of securities to submit a report for the most recent five-year period with respect to workplace and sexual harassment. The commission must provide for the development and dissemination of training programs and information regarding workplace and sexual harassment. </p> <p>The bill denies a tax deduction for amounts related to judgments and expenses in connection with litigation related to workplace or sexual harassment. It also excludes from gross income, for income tax purposes, any amount received in connection with a claim or settlement related to workplace or sexual harassment, or other unlawful discrimination.</p>

tv_txt: I 117th CONGRESS 1st Session H. R. 5842 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.

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 . I Preventing and Responding to Workplace Harassment 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. 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. 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) ). 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. 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. II Modification of Tax Treatment of Amounts Related to Employment Discrimination and Workplace Harassment 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: 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: 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. 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: 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.