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Bigger than Arbitration! New Bill Would Make it Illegal for Businesses to Enforce Arbitration Agreements in Cases Involving Sexual Harassment or Gender Discrimination

In reaction to the “Silence Breakers,” a bipartisan group of lawmakers recently introduced legislation that would prohibit employers from including sexual harassment or gender discrimination claims in their arbitration agreements.   Advocates say the bill, known as the Ending Forced Arbitration of Sexual Harassment Act, would allow victims of these types of acts to bring a cause of action in court and publically address the situation.

It is estimated that more than half of all American workers are subject to mandatory arbitration clauses.   Through such agreements, both sides agree to resolve a dispute out of court with the assistance of an independent arbitrator rather than by going to court. Companies consider it an effective and more streamlined dispute-resolution system that saves money.

In sponsoring the bill, Senator Kirsten Gillibrand, D-N.Y., says arbitration in situations involving sex harassment and discrimination results in a “secret meeting” where the affected parties “try to work out some kind of deal that really only protects the predator.” Representative Cheri Bustos, D-Ill., said the bill would “help root out bad actors by preventing them from sweeping this problem under the rug.”

One company in particular is in the spotlight as proponent’s push for the bill. Earlier this year, news broke that thousands of former employees of Sterling Jewelers, the Akron-based parent of Kay Jewelers and Jared the Galleria of Jewelry, claimed to have been subjected to sexual harassment and discrimination during their time working for the jewelry giant.  The class-action arbitration case was first started in 2008 and since Sterling requires all workers to waive their right to bring any employment-related disputes against their employer in court, the company had successfully kept the claims out of the public eye.  Those pushing for the bill consider Sterling to be an example of how binding arbitration and sexual harassment claims just don’t go together.

Given the surge of sexual harassment claims in recent months, it is not surprising that such a bill is at center stage.   Today, more and more people are feeling emboldened to stand up and raise sexual harassment claims.  Those pushing for the bill hope it will help keep that momentum going.  While there is nothing employers must do at this point to change their arbitration clauses, employers should be diligent in ensuring their workplace is and remains harassment-free.   Sexual harassment and gender discrimination is very real, very relevant, and could be very costly.

Brody and Associates regularly provides training and counseling on maintaining a harassment free environment and on employment law issues in general. If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.