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“New Ban on Mandatory Arbitration of Sex Assault Claims May Spur More Worker Protections”

Law.com

February 17, 2022

  • Congress passed a bill banning mandatory arbitration for sexual harassment and assault claims.
  • Employment attorneys say it could pave the way for more expansive worker protections.
  • Efforts to ban mandatory arbitration clauses have been ramping up for years.

Workers alleging sexual assault and harassment scored a key victory last week, when Congress passed a bill that banned employers from forcing those claims to go to arbitration.

Based on the impact of previous legislation that emerged from the #MeToo movement, employment attorneys say it’s likely the bill will pave the way for more worker-friendly workplace changes—specifically policies that ban mandatory arbitration for other types of civil rights violations.

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First introduced in 2017 by Senators Kirsten Gillibrand and Senator Lindsey Graham, the bipartisan Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 amends the Federal Arbitration Act, so that employers can no longer put mandatory arbitration clauses applicable to sexual assault and harassment claims in employee contracts, offer letters, or handbooks.

The bill also bans clauses waiving a worker’s right to bring these claims on a class basis.

Once signed into law by President Biden, the bill will benefit alleged victims of sexual assault and harassment in several ways, said Julie Goldsmith Reiser, a Washington, D.C., partner at plaintiffs’ firm Cohen Milstein.

Because many companies work with a limited pool of arbitrators, and the arbitrators have an incentive to make sure they remain in that pool and continue to secure business, “mandatory arbitration has a way of … tipping the scales toward a company who is a repeat player with the arbitrator,” Reiser said. Other routes to resolving sexual assault and harassment claims—including litigation—could potentially level the playing field for accusers.

Most critically, however, the bill would give alleged victims a choice in how they want to pursue their claims. While COVID-19 court closures have resulted in delays for workplace sexual assault and harassment litigation nationwide, pushing many plaintiffs to turn to mediation or the quicker arbitration process instead, “what you want to get away from is the mandatory part of it,” Reiser said.

“I’m sure there are excellent arbitrators out there, I’m sure that arbitration can be faster, and I’m sure that in situations where people want to have their litigation resolved quietly and confidentially, that’s a good outcome,” Reiser said. “The only issue then becomes: do they have a choice? Are they making the choice with all the information out there or not?”

But the fact that the new law only covers sexual assault and harassment claims could bring practical challenges. If a single worker simultaneously brought sexual harassment and race discrimination claims against a company, for example, “It’s possible that the courts may end up splitting the claim and say, ‘Well, you can’t go to arbitration for this claim. But you can go to arbitration on that claim,’” said Wasserman. “So are people going to be litigating in two separate forums?”

Both Wasserman and Reiser opined that mandatory arbitration bans could eventually extend to more types of employment claims. The impact of other pieces of legislation spawned by the #MeToo movement may be instructive. In California, for example, a law that went into effect in 2019 banned the use of confidentiality clauses in settlements or severance agreements related to workplace sexual assault or harassment. Last month, another bill in the state known as the Silenced No More Act extended the same ban to all types of harassment, discrimination, and retaliation in the workplace.

Another California bill that came out of the #MeToo movement, which required corporate boards for certain companies to meet a quota for female board members, was similarly expanded two years after it was passed in 2018. In 2020, the state passed a second bill mandating a similar quota for board members from other underrepresented communities.

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Reiser said she is hopeful the legal landscape will continue to shift. “Everybody should feel safe at work,” Reiser said.

“Usually if somebody is willing to harass, they’re also doing softer forms of discrimination,” she said, adding that, ideally, arbitration bans “will expand to cover these.”

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