No Forced Arbitration For Sexual Harassment Is A Good Start

The House and Senate have passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021. It will go into effect once signed by President Biden. This law will ban forced arbitration and class action waivers  for all claims regarding sexual assault and sexual harassment. This was the House version, which is much better than the original Senate version that limited what was defined as sexual harassment. The version passed covers all sexual harassment cases as we know them.

 

Here's what it says:

§ 401. Definitions

“In this chapter:

“(1) PREDISPUTE ARBITRATION AGREEMENT.—The term ‘predispute arbitration agreement’ means any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement.

“(2) PREDISPUTE JOINT-ACTION WAIVER.—The term ‘predispute joint-action waiver’ means an agreement, whether or not part of a predispute arbitration agreement, that would prohibit, or waive the right of, one of the parties to the agreement to participate in a joint, class, or collective action in a judicial, arbitral, administrative, or other forum, concerning a dispute that has not yet arisen at the time of the making of the agreement.

“(3) SEXUAL ASSAULT DISPUTE.—The term ‘sexual assault dispute’ means a dispute involving a nonconsensual sexual act or sexual contact, as such terms are defined in section 2246 of title 18 or similar applicable Tribal or State law, including when the victim lacks capacity to consent.

“(4) SEXUAL HARASSMENT DISPUTE.—The term ‘sexual harassment dispute’ means a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.

Ҥ 402. No validity or enforceability

“(a) In General.—Notwithstanding any other provision of this title, at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct, no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.

“(b) Determination Of Applicability.—An issue as to whether this chapter applies with respect to a dispute shall be determined under Federal law. The applicability of this chapter to an agreement to arbitrate and the validity and enforceability of an agreement to which this chapter applies shall be determined by a court, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement, and irrespective of whether the agreement purports to delegate such determinations to an arbitrator.”.

While this doesn't apply to sex discrimination that isn't harassment (such as a termination, suspension without pay, denial of promotion or failure to hire where sexual favors aren't requested), it does apply to harassment due to gender, and to harassment due to sexual orientation, as well as to harassment when sexual favors are requested. If you are singled out for harassment due to either gender or sexual orientation, that is sexual harassment under Title VII and under some state law, such as the Florida Civil Rights Act.

There is a move afoot to ban forced arbitration in other types of discrimination and harassment cases. This is a good start, but it isn't the end.

Why does it matter? Because arbitration is a secret tribunal, which is bad enough. Arbitration started as a good thing, where both parties chose it as a quicker way to resolve cases. The arbitrators were experts in complicated matters like construction. But it's come a long way from that.

The way forced arbitration works now is the big arbitration companies contract with corporations to be the arbitration forum they use for employment disputes. While the parties can pick from panel members and veto others, the panels tend to be skewed to pro-employer arbitrators. After all, if Arbitrator A rules against Company B, Arbitrator A is then forever vetoed as a panelist for Company B. And Company B spreads the word. Arbitrator A gets fewer and fewer cases. Goodbye income as an arbitrator.

So it's in arbitrators' interests, especially full-time arbitrators, to rule for employers. They don't care if employees, who will be in front of them once, are upset. They do care if a company that will be in front of them 200 times will be upset and veto them.

I'm not saying all arbitrators think like this. Many are still true neutrals. Heck, I'm an arbitrator. Because of my background representing employees, I'm rarely picked in employment cases because employers think I won't be neutral (untrue, by the way). Management-side lawyers and HR folks get picked a lot, and can make a nice income from them. 

Under many agreements, employees must pay half the arbitration expenses. Arbitrators are paid by the hour, and filing fees in high dollar cases can be huge. Employees can be forced to shell out thousands of dollars, if not tens of thousands of dollars, just to pay for the arbitrator and filing fee. Court costs a moderate filing fee of a few hundred dollars. Judges are paid by tax dollars, so the parties pay nothing.

I've seen too many situations where employment arbitration was basically an expensive kangaroo court. And there's almost no remedy. No appeal. No ability to challenge most rulings. And because it's secret, sexual harassment and sexual assault can be kept secret. Court is public. Anyone can attend a trial or hearing. Employers hate that.

Employers love the arbitration system. Love, love, love it. Employees should fight forced arbitration wherever they can. Now is a good time to call your representatives and tell them it's time to end forced arbitration.

Companies Fold As Employees Push Back On Forced Arbitration

First Google had a bunch of employees walk out to protest sexual harassment arbitration, and it rescinded its arbitration policy. Now other companies are following as employees push back. Facebook, Microsoft, Uber, Square, Airbnb and eBay have all rescinded or said they will rescind their forced arbitration agreements for sexual harassment claims.

It isn't just tech firms that are getting pressure from employees. When Harvard law students threatened to boycott law firm Kirkland and Ellis because of mandatory arbitration agreements, the firm quickly did a 180.

Now students at other law schools are joining the fight, and have vowed not to work for law firms that require arbitration of employment law claims. The student statement includes these strong statements against employee arbitration agreements:

Mandatory arbitration agreements prevent employees from seeking justice in court and limit the enforcement of substantive employment rights. Mandatory arbitration forces employees to submit any dispute with their employer to binding, private, and often confidential arbitration—a process which advantages sophisticated, repeat players at the expense of individual claimants.
. . .

Finally, we recognize that mandatory arbitration is a policy that negatively impacts all workers, legal and non-legal, and not merely associates and summer associates. We are committed to including questions about employment practices for all employees in future surveys.

I think it's about time employees push back. Still, I have to wonder how many of these law students will end up going into management-side law practice and forcing employees of their clients to arbitrate, despite their clear knowledge that such agreements are about oppressing workers. 

Now that employees have demonstrated that resistance to arbitration agreements is not futile, I hope unions and other employee groups will take up this fight. And I hope (but seriously doubt) that this new generation of lawyers might actually push their clients to drop forced arbitration of employees.

Arbitration Agreements - Yes Virginia, You May Have Given Up Your Rights

Arbitration agreements and waiver of right to trial pop up all over the place in employment situations. Some of the documents employers like to stick them to get you to sign away your right to sue are applications, handbooks, employment agreements, arbitration agreements, union contracts – just about any place they can think of to get you to sign without thinking.

Even if you have time to think about them, most states will let employers get away with making you sign away rights you thought were guaranteed in the constitution. Although there's a move afoot in Congress to change this, right now assume your arbitration agreement will be enforced.

If an employer presents you with an arbitration agreement or waiver of your right to trial pre-employment or during your employment, that’s the time to negotiate to make it go away. If the employer won’t negotiate, you can accept it or turn down the job. If they present it to you after you’ve accepted the job, most states will let them say, “sign it or be fired.”

I've seen employers argue that a page acknowledging receipt of the handbook (not having read it) is enough to bind the employee to an arbitration clause even though the handbook specifically said it wasn't a contract. Do they get away with this? Maybe.

Courts love arbitration agreements. It lightens their workload. Don’t expect help from the courts anytime soon. The remedy will have to be through Congress or your state legislature.

Here’s what you need to know about arbitration.

Arbitration defined: An arbitration where you submit your employment dispute to a neutral third party instead of the courts. Some arbitration is non-binding, that is, the parties can still go to court if they aren’t satisfied with the decision. But most arbitration is binding on the parties. That means you don’t even get to appeal an arbitrator’s decision under most circumstances.

Arbitrators: An arbitrator who handles employment arbitrations is usually a current or former employment lawyer, HR person, or other individual with experience in employment law matters. Arbitrators go through training on the process before they are approved to be on a panel. Depending on your arbitration agreement, you may have one or three arbitrators on your panel. You will usually have some input into the choice of your arbitrator. You will always be able to seek to remove them if they have a conflict of interest.

Rules: Most arbitration forums have detailed rules you need to follow throughout the process. Try to elect a forum, if you have a choice, that has employment rules (a great example is American Arbitration Association, which has separate rules for employment disputes), not just general commercial rules. Employment rules usually have some built-in due process protocols to protect individuals. Commercial rules are more geared toward businesses, and may assume the businesses are represented and experienced in arbitrations.

Discovery: Usually, arbitration relies on mutual exchange of documents, no depositions, and no full discovery that you’d get in courts. However, in employment situations, many arbitrators will allow limited discovery and depositions. It’s important to understand what will be allowed from the start of your process.

Costs: Who bears the costs is decided in the arbitration agreement or, if the agreement is silent, in the rules of the arbitration forum. If the rules require the employer and employee to split costs equally from the beginning, that’s a huge advantage for the employer. Remember, arbitrators have to be paid for their time. Most employees, especially unemployed ones, can’t afford to pay. The better way is to have the employer bear the costs from the beginning, then if the employee loses have them assessed with all or some of those costs at the end. But if your employer chose the forum and wrote the agreement, can you guess which way they’ll likely choose? If you have a lawyer representing you, they may be able to fight to get a fair apportionment of costs.

Time: The good news is, arbitration is usually quicker than a court case. The bad news is that there may be shortened deadlines for filing. Read your agreement and the rules very carefully.

Donna’s tips:

a. Arbitration has lots to offer as a form of alternate dispute resolution. It can save time and money, and the person making the decision is experienced in employment law. If there are due process protocols in place and a fair cost allocation, arbitration is nothing to fear.

b. Just because a proposed arbitrator handles primarily employer-side law, doesn’t mean they’ll be bad on your case. Most arbitrators take their position as neutrals very seriously. I’m an arbitrator who also happens to be a lawyer representing primarily employees, and I’ve ruled for management in some of my arbitrations. I've seen management-side lawyer/arbitrators rule for employees. Go for experience, a balanced resume, and if you can, look at some prior decisions before you make a decision on which arbitrators to strike from your panel.

c. Sometimes both sides hate the arbitrator choices the forum offers. Both sides can agree on an arbitrator they like outside the agreed forum.

d. Most objections you hear in court won’t apply to arbitration. Arbitrators can hear irrelevant evidence and all sorts of evidence and testimony that would be inadmissible in court. They tend to err on the side of allowing more, rather than less, information.

e. You don’t have to be represented in arbitration any more than you have to be represented in court. Still, if you can find a lawyer who handles employment arbitrations you’re better off than going it alone in most cases.