States Are Banning Arbitration Clauses for Sexual Harassment Claims: Is Arbitration’s Time Up?
Almost two years later, the #MeToo movement is still in full swing. Employers across the country are still seeing and feeling the consequences in very real ways. In the latest example, arbitration of sexual harassment claims may be dead!
What is an Arbitration Provision?
An arbitration provision can be a requirement in a contract that when faced with contract disputes, (1) compels parties to seek arbitration in lieu of courtroom litigation; and (2) makes facts and rulings found at arbitration final and not subject to review by the courts. Employers have routinely included these types of provisions in employee agreements and handbooks, in an attempt to compel arbitration of any such dispute.
Companies Give Up on Arbitration
In the past year, and in a huge shift from past practices, employers across the country have unilaterally announced they will no longer require employees to arbitrate sexual harassment claims. For instance, late last year, both Facebook Inc. and Google, LLC in rapid succession announced they would no longer force workers to arbitrate sexual harassment claims. Notably, Google made the announcement shortly after workers across the world walked out of its offices in protest of sexual harassment settlements the company hid for years.
States and localities are also banning these provisions. For instance, New York State banned mandatory arbitration provisions under its new sexual harassment law. This means any contract entered into after July 11, 2018, which contains an arbitration provision for sexual harassment claims, is unenforceable!
Other states and localities are likely to follow suit. The tea leaves make it clear arbitration may be a thing of the past when it comes to sexual harassment claims.
As we have repeatedly written over the last two years, employers must take the #MeToo movement seriously! Employers must investigate harassment claims and take appropriate corrective action. Sticking your head in the sand is not an option. Dead are the days where missed steps are not part of the public record because arbitration kept claims out of the courts and the light of day. Employees across the country are speaking out and demanding more transparency. Bottom line – it is time to do something!
Brody and Associates regularly advises its clients on matters involving arbitration and other areas of alternative dispute resolution. If we can be of assistance in this area, please contact us at firstname.lastname@example.org or 203.4540560.