Employers in All States: No More Pre-Dispute Arbitration

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Employers in All States:  No More Pre-Dispute Arbitration  

Employers often include arbitration clauses in employee handbooks and policies.  However, arbitration of sexual assault or harassment employee claims cannot be enforced.  California has been opposed to secret arbitration of these types of claims and now a federal ban on pre-dispute arbitration and secrecy requirements in these types of matters is about to go into effect.  Employers should update their employee handbooks and policies.

This new federal law is a “bipartisan, bicameral legislation [that] empowers survivors of sexual assault and sexual harassment by giving them a choice to go to court instead of being forced into arbitration,” the White House said in a statement.  The choice is the employees to make and can opt for arbitration after the claim arises, but not before. The law will apply to any new claims, regardless of when the bad behavior occurred.  So, any arbitration agreement signed before a claim or dispute involving sexual assault or sexual harassment arises is voidable at the option of the individual with the claim (i.e., the employee).  The legislation also applies to sexual-harassment and sexual-assault claims brought in a joint, class or collective action.

As for California law, AB 51 goes even further in that it broadly prohibits employers from requiring workers to arbitrate state-law discrimination and labor code claims.  While AB 51 was originally set to take effect in 2020, lawsuits first ensued, and a federal court prevented the law from taking effect initially.  However, a federal appellate court upheld the law (Chamber of Commerce v. Bonta) and the matter is now being reviewed again before taking effect.  It is unlikely that AB 51 will be struck down after the appellate court ruling.  So, with the new federal law and the even broader AB 51 prohibitions, California employers should review and update handbooks and policies.  If you have any questions, 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.

Attorneys admitted to practice in California, New York, Colorado, Texas, and Oregon