Background

The #MeToo movement has gripped headlines for months by highlighting the prevalence of sexual harassment, with the entertainment industry and politics being a particularly high-profile focus. By bringing these issues to the forefront of consciousness, legislators are finally beginning to explore methods to address these pervasive issues.

One such effort is the federal “Ending Forced Arbitration of Sexual Harassment Act” (H.R. 4734; S.B. 2203), a piece of legislation that could significantly amend the Federal Arbitration Act. Garnering vast bipartisan support, including all Attorneys General from every state, the District of Columbia, and several U.S. territories, the bill seeks to nullify any agreements signed before the dispute arose requiring arbitration of sexual discrimination or harassment claims recognized under Title VII. Yet, little attention is being paid to this potential legislation.

Statistics suggest that more than half of private sector workers in the country have entered into mandatory arbitration agreements. Most employees sign these agreements as part of their orientation packets, and may be unaware that they have agreed to mandatory arbitration of disputes including sexual harassment claims. The Ending Forced Arbitration of Sexual Harassment Act threatens to shake up this status quo.

The Proposed Bill

The Ending Forced Arbitration of Sexual Harassment Act is short and concise. The key language of the legislation is as follows: “no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of a sex discrimination dispute.” A “predispute arbitration agreement” is defined as “any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement.” A “sex discrimination dispute” is defined as “a dispute between and employer and employee arising out of conduct that would form the basis of a claim based on sex under title VII of the Civil Rights Act of 1964 . . . regardless of whether a violation of such title VII is alleged.” Lastly, the bill specifically excludes labor unions from its purview.

Analysis & Considerations

The bill itself is quite simple: arbitration agreements signed by employees prior to a dispute arising will be unenforceable if said agreement includes mandatory arbitration of sex discrimination disputes. Despite this simplicity, the bill is potentially groundbreaking in that it could invalidate most arbitration agreements between employers and employees. This is because such agreements require arbitration of all disputes in general; they do not typically exclude particular types of disputes such as sexual harassment. Since the bill broadly defines “sex discrimination dispute” as anything covered by Title VII, it is not limited merely to discrimination, but some may argue, covers other employer actions based on sex such as: failure to hire, pay, or promote; termination; and pregnancy discrimination. Accordingly, should the bill pass into law, most employment arbitration would need to be re-written to specifically exclude sexual discrimination disputes in order to be enforceable. Failure by an employer to appropriately amend its arbitration agreements could lead to it being unable to enforce arbitration of other types of claims like breach of contract. Importantly, the legislation does not prevent employees from choosing arbitration; rather, it prevents employers from compelling arbitration. Thus, the choice to keep the matter private remains in the employee’s hands.

Proponents of the bill, which are significant in number and cross political aisles, explain that arbitration is simply not the proper fit for sexual harassment claims because it constrains victims’ procedural and substantive due process rights, and often allows the accused to remain hidden and maybe even to remain employed. Microsoft announced that it would no longer send harassment claims to arbitration, its reasoning being that “people’s voices need to be heard if their problems are to be addressed.” Opponents of the bill are difficult to track down, presumably because they are keeping silent about their stance. The bill is still far from reaching a vote, thus employers are not required to make any changes to arbitration clauses at this time. Also, changes could be made in the coming months as it passes through committee reviews; however, it would be wise for employers to consider the current social climate and look to the future. Employers should remain diligent and attentive in taking any and all steps to prevent harassment and discrimination at the workplace and stay informed of the status of whether their arbitration clauses will remain enforceable.

If you have any questions concerning employment and labor law issues, such as sexual harassment, reach out the Employment Law team at Teague Campbell.