The End of Forced Arbitration for Sexual Harassment and Sexual Assault Claims

The #MeToo Movement, a phrase initially coined by Tarana Burke in 2006 to empower women of color to speak out about experiences of sexual violence, gained traction at the end of 2017 when Alyssa Milano encouraged the use of the #MeToo hashtag to promote awareness of the widespread and ongoing issue of sexual assault and harassment.[1] Since then, a number of states have passed legislation meant to combat workplace sexual harassment. For example, California now requires employers with five or more employees to provide at least two hours of sexual harassment prevention training to supervisory employees and at least one hour for non-supervisory employees.[2]

On the federal level, Congress passed the Congressional Accountability Act of 1995 Reform Act at the end of 2018, which changed how complaints of sexual harassment by congressional staff are handled on Capitol Hill.[3] Democrats in the House hoped to expand protections for employees in the private sector, introducing the BE HEARD Act[4] in April 2019. Consideration of the BE HEARD Act unfortunately stalled in committee.

A key issue in combatting sexual harassment, identified by activists, state legislatures, and Congress, was the enforcement of mandatory arbitration provisions in employment agreements. Arbitration can be costly, limits the ability of employees to assert their civil rights, and ensures that claims and final decisions remain private, preventing public scrutiny of even repeat offenders.

After passing the United States House of Representatives 335 to 97, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFASA) passed the Senate unanimously on February 10, 2022.  President Joe Biden signed the bill into law on March 3, 2022.

The EFASA amends the Federal Arbitration Act to invalidate pre-dispute arbitration agreements for claims of sexual harassment or sexual assault.[5] While interpretation of the Act will ultimately be left up to the courts, it appears that the Act invalidates arbitration agreements signed before enactment of EFASA for claims of sexual harassment or sexual assault that “arise[] or accrue[] on or after the date of enactment.”[6]

Roughly 60 million workers are subject to forced arbitration in claims arising out of their employment.[7] This is a relatively new phenomenon—almost forty percent of employers who mandate arbitration adopted such a policy after 2012.[8] Employers may condition employment on agreeing to arbitration, and even fire at-will employees who refuse to sign arbitration agreements. These arbitration agreements may appear as a part of new-hire paperwork or in employee handbooks.

In agreeing to arbitrate employment claims, employees often forfeit their right to sue their employer in court. Arbitration agreements may also include a class action waiver, preventing employees from acting collectively to address their employer’s widespread misconduct. Employees who agree to binding arbitration also limit their ability to appeal the arbitrators’ decision. Arbitration is generally considered friendly to employers, with only 1.9% of employees winning monetary awards in forced arbitration between 2016 and 2020.[9]

After the passage of the EFASA, employee arbitration agreements will be enforceable to claims arising out of employment, except for disputes related to sexual harassment or sexual assault.

What constitutes a sexual harassment or sexual assault dispute?

The EFASA leaves the definition of “sexual harassment” relatively broad, relying on the Federal, State, or Tribal laws at issue in the dispute to define when conduct constitutes sexual harassment or assault. In Minnesota, the Minnesota Human Rights Act and Title VII protect employees from being subjected to sexual harassment[10] in the workplace.

A “sexual assault dispute” is defined as a dispute involving a nonconsensual sexual act or sexual contact.[11]

Reporting workplace sexual assault or harassment to the employer obligates the employer to act by investigating the report and changing policies or taking disciplinary measures as necessary. Employers are prohibited from retaliating against employees who report sexual assault or harassment.[12] While a broad reading of the EFASA appears to invalidate arbitration agreements for claims of retaliation for reporting sexual assault or harassment, interpretation of the statute will ultimately be up to the courts.

When does a sexual assault or sexual harassment claim “arise” or “accrue”?

Claims alleging sexual assault typically arise at the time of the assault. Minnesota’s Child Victims Act extended the deadline for bringing claims based on sexual abuse of a minor and may impact when a court deems such claims to have accrued.[13]

Under Title VII, a quid pro quo harassment claim accrues when an allegedly discriminatory “adverse employment action” is communicated to the plaintiff.[14] In this context, being threatened with a demotion or termination for failure to comply, actually being terminated or demoted, or being promised a promotion in return for sexual favors may constitute an adverse employment action. As such, the EFASA invalidates arbitration agreements as to claims for quid pro quo sexual harassment that allege an adverse employment action occurred after the EFASA went into effect.

While a single, severe incident of harassment may support a hostile work environment claim, such claims generally involve repeated conduct,[15] making it more difficult to determine when such a claim has accrued. As it applies to the EFASA, claims for hostile work environment based on sexual harassment may be deemed to have arisen after its enactment, even if the hostile work environment began before, as long as one incident of sexual harassment occurs after the EFASA goes into law.

I think I was sexually harassed in the workplace. Is my arbitration agreement enforceable?

Every case is unique and will depend on the facts and the language in the arbitration agreement. Whether the agreement is enforceable will depend on the type of claim alleged and when the sexual harassment or assault occurred.

In the past, it was up to arbitrators to decide whether the arbitration provision applied to claims arising out of employment. With the passage of the EFASA, courts now have the authority to decide whether an arbitration agreement is enforceable as to claims of sexual harassment or assault.

What if I want to arbitrate my sexual harassment dispute?

Arguably, the most important impact of the EFASA is that it gives employees a choice whether to arbitrate their claims or not. The EFASA does not prohibit employees from agreeing, after asserting their claim(s), to arbitrate sexual harassment or assault disputes. Employees who want to keep their claims private may opt for arbitration, rather than go through the public process of litigation.

If you are experiencing sexually harassing behavior or sexual assault in your workplace, have already reported harassment and are now experiencing retaliation as a result, or are unsure whether the treatment you are enduring constitutes harassment, contact one of our sexual harassment lawyers to discuss your rights by clicking here or calling us at 612-252-3570. The attorneys at Wanta Thome PLC have represented countless employees who have endured harassment in the workplace and have significant experience litigating and resolving sexual harassment cases. Contact us for a free initial consultation.

Footnotes

[1] Cristela Guerra, Where’d the #MeToo Initiative Really Come From? Activist Tarana Burke, Long Before Hashtags, Boston Globe (Oct. 17, 2017), https://www.bostonglobe.com/lifestyle/2017/10/17/alyssa-milano-credits-activist-tarana-burke-with-founding-metoo-movement-years-ago/o2Jv29v6ljObkKPTPB9KGP/story.html.

[2] Cal. Gov. Code § 12950.1 (2020).

[3] About the CAA Reform Act, Off. of Cong. Workplace Rts., https://www.ocwr.gov/the-congressional-accountability-act/about-the-caa-reform-act/.

[4] BE HEARD in the Workplace Act, H.R. 2148, 116th Cong. (2019).

[5] Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, H.R. 4445, 117th Cong. (2022).

[6] H.R. 4445, 117th Cong. § 3.

[7] Id.

[8] Alexander J.S. Colvin, The Growing Use of Mandatory Arbitration, Econ. Pol. Inst. (Apr. 6, 2018), https://www.epi.org/publication/the-growing-use-of-mandatory-arbitration-access-to-the-courts-is-now-barred-for-more-than-60-million-american-workers/

[9] Forced Arbitration in a Pandemic: Corporations Double Down, Amer. Assoc. for Just. (Oct. 27, 2021), https://www.justice.org/resources/research/forced-arbitration-in-a-pandemic

[10] https://www.baillonthome.com/legal-services/employee-rights/employment-discrimination/sexual-harassment

[11] H.R. 4445, 117th Cong. § 2(a).

[12] https://www.baillonthome.com/legal-services/employee-rights/employment-retaliation/retaliation-reporting-discrimination

[13] Minn. Stat. § 541.073.

[14] Delaware State College v. Ricks, 449 U.S. 250, 258 (1980).

[15] See National R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 114-15 (2002).