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The Arbitration of Workplace Disputes-It had a Good Run

Feb 15, 2022

The United States Senate, in bipartisan fashion, has passed the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act.” Pursuant to the Act employment agreements or employment handbooks that limit an employee who claims to be the victim of sexual assault and sexual harassment employees to the arbitration of such claims, are now null and void (even if previously agreed to in writing by the employee.). By virtue of the Act, those who claim sexual harassment or sexual assault now have a choice between going to court or arbitration. Note that, employers and employees can still enter into a binding arbitration agreement after the claim is asserted. Also, significantly, the Act is retroactive; thus, invalidating existing forced arbitration clauses opening the door for individuals previously bound by such clauses to seek redress in court.

By virtue of the Act’s name, the prohibition against forced arbitration only applies in the context of sexual harassment or sexual assault. Of course, this will require employers to modify their employment contracts and/or employment handbooks which reference arbitration to acknowledge the existence of the Act and the choice afforded to employees in the event their claims are based upon sexual assault or sexual harassment. However, it would not be surprising that, in the very near future, this Act is extended to prevent employers from forcing arbitration in other areas where employees claim discrimination in the workplace such as race, sexual orientation, et al. It would not be surprising if that, by the end of the year, a much broader prohibition was passed by Congress thus limiting severely the workplace disputes that may be forced to arbitration under an employee agreement and/or handbook.

The takeaway for employers is, to the extent that they evaluated and/or controlled workplace conduct with any thought to the "benefits" that would be afforded to them by arbitration - if in fact a claim arose- employers should rethink their workplace conduct strategies in that event as surely more and more workplace discrimination cases will find themselves resolved at the courthouse rather than the arbitrator’s office.