Chalk one up to the #MeToo movement.
On February 10, the U.S. Senate approved the End Forced Arbitration of Sexual Assault and Sexual Harassment Act (“abbreviated” as the “EFASASHA”), which President Biden is expected to sign into law. This statute fundamentally transforms how most employers will have to resolve workplace disputes involving sexual harassment and sexual assault claims.
‘Forced Arbitration’ in Employment Agreements
According to some estimates, 60 million Americans have arbitration clauses in their employment contracts. Arbitration is an out-of-court process for resolving disputes. The parties hire a neutral third party or parties, often former judges, who review submissions, hear evidence, and issue a binding decision. Many arbitration clauses prevent employees from grouping sexual harassment claims together into a single proceeding called a class action.
Employees really don’t have a choice when it comes to forced arbitration: They either agree to arbitration or they don’t get or get to keep their jobs.
Many employers say that arbitration is a good thing, that it’s faster and cheaper than going through a court case. That can be (but importantly is not always) true. In reality, arbitration gives an employer certain, distinct advantages.
Arbitrations Are Confidential
Chief among them is that arbitration is private, and the results are confidential. This allows employers to effectively conceal misconduct that, were it public, could hurt their businesses and their reputations. Victims lose any ability to air their grievances publicly. And harassers may continue to harass.
There are more employer advantages. Because employers hire the same arbitrators over and over again, those arbitrators may tend to rule in favor of those employers. Arbitrators are also perceived to be less willing than juries to award victims of misconduct large amounts if they find that an employer did in fact violate the law.
There are other advantages, but the big benefit to employers has been to keep sexual misconduct secret.
Not anymore.
Congress Ends Forced Arbitration of Workplace Sexual Misconduct Disputes
EFASASHA rewrites existing and future arbitration clauses. Employees can still arbitrate their sexual misconduct claims if they want. But if you don’t want to, you generally don’t have to. It’s your choice. And even if the employment contract says otherwise, a judge, not an arbitrator, will decide whether a claim must go to arbitration.
Nor are victims barred from bringing their claims as class actions anymore. Now, if you and other victims want, you can file one public lawsuit. Again, it’s your choice.
‘Bombshell’
One of the supporters of the legislation is Gretchen Carlson, the former Fox News anchor who accused her employer, Roger Ailes, of sexual harassment. She learned that her contract required private arbitration, but she chose to sue instead and eventually won a settlement. Her story is told in the movie, “Bombshell,” and was one of the first in a series of high-profile cases that kicked off the #MeToo movement.
Will More Bad Actors Be Held Accountable?
This new law will change the employer-employee dynamic dramatically when it comes to dealing with sexual misconduct in the workplace. Although many employers have made great strides in rooting out improper behavior, they will now have to take even greater steps if they want to avoid an ugly, very public, lawsuit.
That includes more, and more effective, anti-harassment training. Employers will also need to ensure that they have more effective processes in place. They will need to adequately investigate credible misconduct allegations and promptly remedy any misconduct they find.