Under the Federal Arbitration Act (FAA), state and federal courts are obligated to enforce agreements between employers and employees to submit disputes to a private, neutral arbitrator for resolution rather than filing lawsuits.
This is seen by many employers as a cheaper, quicker, more private and more efficient means of dispute resolution than fighting a case in court.
Employers that enter agreements with employees to arbitrate workplace disputes would do well to have an employment attorney review their arbitration provisions.
However, employers that enter agreements with employees to arbitrate workplace disputes would do well to have an employment attorney review their arbitration provisions.
That’s because this past winter, Congress passed and President Joe Biden signed an amendment to the FAA under which employees can no longer be forced to arbitrate claims of workplace sexual harassment or sexual assault.
This doesn’t mean that sexual harassment and sexual assault claims can never be arbitrated; parties can still agree to arbitrate.
This doesn’t mean that sexual harassment and sexual assault claims can never be arbitrated; parties can still agree to arbitrate.
But the law requires that employees have the right to opt out of arbitration of such claims if they want to. This applies to all arbitration agreements, not just those signed after the law was passed.
If your arbitration provision is a broad one that requires arbitration of all claims, it’s probably still valid for claims that don’t involve sexual harassment or discrimination.
If your arbitration provision is a broad one that requires arbitration of all claims, it’s probably still valid for claims that don’t involve sexual harassment or discrimination.
But if an employee does allege sexual harassment or discrimination, be advised that a court won’t enforce it and such claims will end up in litigation instead.
Unless, or course, the employee willingly consents to arbitration.
Employers should also note uncertainties about how this law will actually play out now that it’s in effect.
For example, some fear that it could create a “slippery slope” effect where the reasoning behind the law extends to other forms of discrimination, like race and sexual orientation discrimination.
The law could also create potential logistical issues if an employee brings multiple kinds of claims in the same lawsuit.
The law could also create potential logistical issues if an employee brings multiple kinds of claims in the same lawsuit.
It’s possible that the sexual harassment or discrimination claims would end up being litigated in court while other claims are forced into arbitration, which could create a challenging dynamic.
At the same time, it’s can’t be taken for granted that some employees won’t decide to pursue their sexual harassment claims in arbitration regardless of the new law.
Although there’s a broad assumption that arbitration is more favorable to employers, there are also very strong reasons why arbitration may be better for workers as well.
Although there’s a broad assumption that arbitration is more favorable to employers, there are also very strong reasons why arbitration may be better for workers as well.
For example, it offers considerably more privacy.
Employees may still opt for court because they want to take a public stand against the employer and they want to have certain protections that only litigation provides.
Of course, employees may still opt for court because they want to take a public stand against the employer and they want to have certain protections that only litigation provides.
Additionally, some employees may feel the simplified rules of evidence and procedure for arbitration and limitations on discovery, which involves interrogatories, depositions and document production, may disadvantage them in being able to prove their case.
To learn more about these issues, contact an employment attorney where you live.
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