Arbitration Clause Federal Ban In Effect
Arbitration Clause Federal Ban In Effect
We previously wrote on the upcoming federal ban on arbitration clauses for sexual-harassment and sexual assault claims and advised that employers should review employment agreements, handbooks, and policies that previously required arbitration of employee disputes, and to exclude sexual harassment and sexual assault claims. The federal law took effect March 3. States like California and New York already banned mandatory arbitration of sexual harassment and sexual assault claims.
So, while employees in all states may seek to have their sexual assault and sexual harassment disputes resolved by arbitration, they cannot be forced to do so as was the case when employers required agreement in advance to arbitrate claims in private, instead of in the public court forum, which is viewed as slower and more costly forum.
The federal law was a bipartisan agreement under H.R. 4445 (https://www.congress.gov/bill/117th-congress/house-bill/4445) to give victims of sexual harassment or sexual assault a choice to have their claims decided privately (arbitration) or in a public forum. It takes control over the secrecy of the claims and any settlement from the employer, as it was widely regarding as a method for employers to protect perpetrators and silence survivors. So, while employers can continue to have arbitration agreements with employees that require arbitration for other types of claims, having outdated and over-broad policies may place the employer in jeopardy.
Further, employers with mandatory arbitration provisions now may see claims of sexual harassment and sexual assault included in other claims, all in an effort by the employee to have a court reject the employer’s demand for arbitration of arbitrate-able claims, arguing that the claims are intertwined, and the employee has a right to a jury trial on everything. This also seems like the beginning of other claims (e.g., race discrimination) that will be excluded from arbitration. So, employers might begin the process of updating policies now. If you have any questions regarding the development or other employment related requirements, please contact Dawn at: dcoulson@eppscoulson.com
Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney. It is considered advertising under laws of some states. Epps & Coulson, LLP encourages you to call to discuss these matters as they apply to you or your business.
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