Congress May Ban Arbitration of Gender Harassment and Discrimination Claims

Over the past several months, allegations of sexual misconduct have dominated headlines in all walks of celebrity life – including Hollywood, national newsrooms, business boardrooms, and even the halls of Congress. These revelations of widespread harassment have fueled the rise of the “#metoo” movement, which strives to raise the curtain on the pervasiveness of sexual harassment and assault in both the workplace and everyday life.  Indeed, Time Magazine has collectively named “The Silence Breakers” as its 2017 Person of the Year.  In many cases, and as is common in the American workplace, accusers of the alleged perpetrators now in the news had been required to sign agreements requiring arbitration of any employment-related disputes.

Congress has acted quickly to continue to “break the silence,” turning its attention to pre-dispute employment arbitration agreements (such as those commonly entered into upon an employee’s hire).  On December 6, 2017, a bipartisan coalition – including Reps. Cheri Bustos (D-Ill.), Pramila Jayapal (D-Wash.), Walter Jones (R-N.C.), and Elise Stefanik (R-N.Y.), along with Sens. Kirsten Gillibrand (D-N.Y.), Kamala Harris (D-Calif.), and Lindsey Graham (R-S.C.) – introduced the Ending Forced Arbitration of Sexual Harassment Act.  These members of Congress (and other critics of arbitration) have stated their belief that the often-private arbitration process protects serial harassers by keeping allegations and their resolutions quiet.

The bill would make pre-dispute arbitration agreements unenforceable in claims of sexual harassment and discrimination under federal law. This merits a brief pause to unpack – despite the bill’s title, its effect is not limited solely to harassment claims.  If passed as written, arbitration agreements would be unenforceable in any gender-based employment claim, including discriminatory discharge, failure to hire, failure to promote, wage disputes, and any other common form of alleged “adverse action.”  Given that most states follow the federal government’s lead in the civil rights arena, we can expect that several states may follow suit and ban arbitration for claims under analogous state statutes, either through judicial opinions or enacting their own versions of the bill.

Employers should also take note that the bill, as written, appears to invalidate any agreement that “requires arbitration of a sex discrimination dispute.”  Many standard arbitration agreements currently in effect likely do not contain a carve-out for gender-related claims – and may even explicitly include those claims.  Unless the bill is amended before passage, most existing employment arbitration agreements would arguably become immediately void for all purposes – even if the claim brought has nothing to do with gender.

An employer could certainly argue that applying the statutory language so broadly is absurd. On this point, however, the bill makes another significant change by explicitly removing authority to determine the validity of an arbitration agreement to which the bill applies (i.e., those which “require arbitration of a sex discrimination dispute”) from the arbitrator (as is traditional) and vesting it with the court.  Accordingly, disputes over whether the bill applies to existing arbitration agreements, even in claims unrelated to gender, may become more expensive.

Watch this space for updates on the progress of the Ending Forced Arbitration of Sexual Harassment Act. Should the bill pass as written, employers must be prepared to revise existing arbitration agreements and employment handbooks to carve out gender-related disputes.  In any event, and as has always been the case in civil rights ant protected class matters, the best defense amidst the “#metoo” movement will continue to be a good offense.  Employers should proactively review policies, conduct regular trainings (and re-trainings), and respond quickly and appropriately to any complaints that arise.