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No More Forced Arbitration in Sexual Harassment Claims

Many people have been subjected to sexual harassment in the workplace in California. Since the #MeToo movement, more attention has been paid to the problem of workplace sexual harassment. Stories about powerful men sexually harassing and abusing women in the workplace have abounded in the national news media, including those involving Harvey Weinstein's sexual abuse of female actresses and Roger Ailes of Fox News, who was forced to step down for his long pattern of sexual harassment against numerous women who worked for the company.

In Roger Ailes' case, former anchor Gretchen Carlson filed a lawsuit only to be told that she could not do so because of an arbitration clause contained in her employment contract. When her lawyer discovered the forced arbitration clause, he helped her file a lawsuit against Ailes personally instead of the network to make sure that it would become public. Fox News later settled with Carlson for $20 million.

Carlson's experience led her to advocate for Congress to pass a law prohibiting forced arbitration clauses in employment contracts for sexual harassment claims. President Joe Biden signed a bipartisan bill into law on March 3, 2022, which does just that.

Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 was initially introduced in the U.S. Senate by Senator Kirsten Gillibrand of New York and Senator Lindsey Graham of South Carolina. Many victims helped to support the bill's passage with stories about how they had employment contracts with forced arbitration clauses and could not pursue legal remedies in court.

The U.S. House of Representatives passed the bill in February in an overwhelming majority vote with 335 in favor and 97 against. In the Senate, the bill was passed by a voice vote.

Effect of This Law

Employers will no longer be allowed to include forced arbitration clauses for claims of sexual harassment or sexual assault in their contracts with employees. Previously, there had been some disputes about whether the Federal Arbitration Act preempted state laws that sought to prohibit forced arbitration clauses for sexual harassment and sexual assault claims.

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act amends the Federal Arbitration Act so that any forced arbitration clauses contained in employment contracts mandating arbitration of sexual assault or sexual harassment claims are unenforceable and invalid.

The law will nullify any pre-existing mandatory arbitration clauses included in employment contracts that purport to force victims of workplace sexual assault or harassment to arbitrate their claims against their employers. However, the law does not prevent an employee from choosing to arbitrate a sexual harassment or sexual assault claim. For example, if an employee does not want the sensitive information to be public, he or she can still choose to arbitrate a claim. The employer just cannot force him or her to do so.

Agreements that purport to waive the employee's right to participate in a class-action lawsuit against an employer for sexual harassment or sexual assault are also prohibited under the new law. This means that employees are no longer required to arbitrate sexual harassment claims or sexual harassment class actions against their employers even if their employment contracts include mandatory arbitration clauses or if they have signed waivers of their rights to participate in sexual harassment or assault class-action lawsuits against their employers.

If an employer and employee disagree about whether a claim qualifies as a sexual harassment or sexual assault dispute, the court must make that determination instead of an arbitrator.

Employers are still allowed to include mandatory arbitration clauses for many other types of employment disputes, including discrimination claims that do not include allegations of sexual assault or harassment. The law addresses mandatory arbitration clauses that employees sign before disputes arise but does not address arbitration agreements that an employee might sign after the dispute has arisen. For example, if an employee initially agrees to arbitrate a sexual harassment claim after the incident has occurred, the law does not talk about whether the employee can later back out of arbitration.

Why Is the New Law Important?

Many employers include mandatory arbitration clauses in their contracts with employees or have new employees sign documents agreeing to mandatory arbitration if any dispute arises as a condition of employment. Mandatory arbitration means that the employees cannot seek legal redress through the court and must instead resolve them through arbitration.

Arbitration is an out-of-court process that is held in private. Employers choose arbitrators to hear employees' claims against them. Since they are hired by the employers, many arbitrators tend to issue more decisions in favor of the companies instead of the employees. Arbitration is also held in private, so decisions reached by arbitrators are generally non-public. Victims of sexual assault and sexual harassment at work might want the public to know about the actions of an employer to help to prevent the employer from permitting or engaging in similar conduct in the future.

Unlike lawsuits, decisions reached in arbitration are also not subject to an appeal. This means that sexual assault and harassment victims who received unfavorable decisions in arbitration of their claims could not appeal them to the court. The new law should go a long way to helping to protect the rights of sexual harassment and sexual assault victims in the workplace.

What Employers Should Do

With the passage of the new law, employers can either draft new arbitration agreements for their employees to sign or stop enforcing existing agreements between them and employees for sexual assault and sexual harassment claims. If an employer will not enforce its existing arbitration agreement for these types of claims, it should issue a clear policy and notify its employees that the mandatory arbitration clause no longer applies to sexual harassment or sexual assault claims.

What Employees Should Know

The new law means that any arbitration agreement you have already signed will not prevent you from filing a lawsuit against your employer if you are sexually harassed or assaulted at work. For other types of employment disputes, however, mandatory arbitration clauses will still apply.

When you accept a new job, you should carefully review the documents you are asked to sign to see if they include mandatory arbitration clauses. If you refuse to sign an arbitration agreement, the employer might rescind your job offer. However, your employer might be willing to negotiate the clause with you if you are a valued employee or a sought-after candidate. You can also agree to sign the arbitration agreement but condition agreeing to sign the document on having the ability to negotiate an arbitration agreement that is fairer to you.

You can ask your employer if you can negotiate the terms of the arbitration clause since it is one more term and condition of your employment. You might want to consult with an employment lawyer to get help with negotiating an agreement that protects your interests.

For example, your attorney might be able to secure an agreement that provides you with equal say in the choice of the arbitrator that will hear any disputes that might arise during the course of your employment. Both you and your employer should have the right to reject a single arbitrator without providing a reason.

Your attorney might also negotiate with the employer to include a provision that calls for a prospective arbitrator's disclosure of any personal interests he or she might have to reduce the potential for bias in favor of your employer. You should have the right to reject an arbitrator whose interests are closely related to your employer's because of potential bias.

Negotiating that the employer will be responsible for paying all of the costs of arbitration is also a good idea. When an employer asks you to sign a mandatory arbitration agreement, the employer is the party that wants to use this dispute resolution method and should be responsible for paying for it.

Try to get your employer to agree that you will have the right to be represented by a lawyer during the arbitration process and that the available remedies in arbitration are of the same types you would receive if you prevailed in your claim in court.

Consult with Steven M. Sweat, APC

If you have been the victim of workplace sexual harassment or sexual assault, you should speak to an experienced employment lawyer at the law firm of Steven M. Sweat, APC. Your lawyer can help you understand your legal options and the potential remedies that might be available to you. If your employer presents you with an arbitration agreement for other types of employment disputes and agrees to allow you to negotiate its terms, our lawyers can also help to seek an agreement that is fairer to you. Call us today at 866-966-5240 for a free consultation.

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