To Have or Not to Have: Federal Lawmakers Seek to End Private Arbitration of Sex Harassment Claims in Arbitration Agreements

A group of federal lawmakers recently proposed legislation referred to as the “End Forced Arbitration of Sexual Harassment Act” (the “Act”) which, if enacted, would prevent employers from enforcing mandatory arbitration agreements in cases where employees allege sexual harassment or gender discrimination in the workplace under Title VII of the Civil Rights Act of 1964. This legislation could significantly alter various employment policies and practices, including any litigation that stems from workplace disputes. 

As proposed, the Act prohibits employers from enforcing arbitration agreements concerning employee allegations of sexual harassment in the workplace or any claim of gender discrimination brought under Title VII, including alleged discriminatory pay or benefits, discharge, failure to promote, or other common adverse actions.  Instead of arbitration, employees would be allowed to pursue their employers in court.  This, of course, would all but negate the various reasons companies require employees to agree to mandatory arbitration agreements as a term and condition of their employment. 

Indeed, many private companies include mandatory arbitration agreements in employment agreements as a strategy to avoid traditional litigation and keep litigation defense costs down.  Because arbitrations are private, the proceedings and outcome ordinarily are confidential, reducing both the risk of copycat plaintiffs and damage to the company’s brand and reputation.  Companies are also attracted to arbitration’s increased predictability; in arbitration, the parties rely on a trained legal professional to decide employment disputes rather than rolling the dice with a jury. 

However, the lawmakers who proposed the legislation believe that arbitration silences those who would otherwise give a voice to the sexual harassment movement. They also believe that preventing mandatory arbitration would shed light on the behavior of sexual harassment perpetrators and prevent them from becoming repeat offenders in other workplaces.

If passed, the proposed legislation would have a far-reaching effect on workplace dispute resolution.  Courts would have the power to invalidate an entire arbitration agreement if it requires sex discrimination claims to be arbitrated.  Thus, most existing employment arbitration agreements could be at risk of being completely unenforceable should the Act become law.  Notably, if passed, the law would not apply to arbitration provisions in collective bargaining agreements if they do not infringe on an employee’s right to pursue litigation, enforcing a right arising out of the U.S. Constitution, a state constitution, a federal or state statute, or public policy.

Clark Hill will continue to monitor and keep you updated on the status of the Act and any related federal or state legislation. If the Act is eventually passed, Clark Hill will advise companies on what specific affirmative steps are required  to comply with the Act, and how best to protect your rights to arbitrate other employment-related disputes.

If you have any questions regarding this proposed legislation, please contact Scott Cruz at (312) 985-5910 | scruz@clarkhill.com or another member of Clark Hill's Labor and Employment Law practice group.