New Federal Law Limits Arbitration of Sexual Harassment Claims
Posted by chapteradmin on Mar. 2, 2022 / Legal Updates / Subscribe 0
By: Miriam L. Rosen and David Schelberg, McDonald Hopkins
Employers often include mandatory arbitration provisions in employment agreements requiring employees to pursue employment-related legal claims, such as discrimination and harassment claims, through private dispute resolution, rather than through civil litigation. Many employers view arbitration as more desirable than litigation as it often permits quicker resolution of disputes, provides greater protections for confidentiality of the proceedings, limits appeals, and affords the parties greater flexibility with discovery and evidentiary procedures. Arbitration has also generally been favored by the courts as an efficient method of dispute resolution.
Despite its value, some see drawbacks to mandatory arbitration of employment claims. For instance, use of arbitration related to workplace sexual harassment or sexual assault claims has been viewed as a way to keep such incidents quiet and potentially allow them to perpetuate. Congress addressed that lingering concern head on last month. In a rare showing of bi-partisanship, the U.S. House and Senate passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act. The legislation limits the scope of mandatory arbitration for workplace sexual harassment and assault claims. President Biden is expected to sign the bill into law in the coming days.
The new legislation, commonly known as the #MeToo Bill, prohibits employers from requiring mandatory arbitration of claims involving allegations of sexual harassment or sexual assault, even if employees have already assented to arbitration for workplace claims. The arbitration limits apply whether the sexual assault or harassment claim is filed pursuant to federal, state or tribal law and also applies to class action claims. The bill does allow employees and employers to agree to arbitrate sexual harassment and sexual assault disputes if such agreements occur after the dispute arises and the employee agrees in writing to arbitration.
With pending implementation of the #MeToo Bill, employers should keep a few key issues in mind:
· The effective date of the bill is fluid. The ban on mandatory arbitration will apply to all sexual harassment and assault “dispute[s] or claim[s] that arises on or after the date of enactment of [the] Act.” This means that employers should immediately begin modifying their approach to such claims to comply with the arbitration ban.
· The bill’s language leaves room for interpretation. As drafted, the bill is ambiguous as to whether other claims by employees raised in conjunction with claims of sexual harassment or assault are also shielded from mandatory arbitration. This issue will likely need to make its way through the courts for interpretation.
The #MeToo Bill is a reminder to employers to regularly review their employment agreements and mandatory arbitration provisions to ensure that they are compliant with applicable federal and state laws and are as effective as possible at protecting their organization. Employers should consult legal counsel for assistance in modifying agreements with arbitration provisions.
This article was written by Miriam L. Rosen, Secretary of Detroit SHRM, and David Schelberg, who are attorneys in the Bloomfield Hills office of McDonald Hopkins PLC, a full service law firm. Miriam can be reached at [email protected] or at (248) 220-1342. Additional articles addressing the many employment law issues impacting businesses can be found at: https://mcdonaldhopkins.com/Insights
Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. March 2022.
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