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Attorneys General Seek to Ban Mandatory Arbitration for Workplace Sexual Harassment

Each state's attorney general has signed a letter demanding that Congress amend the Federal Arbitration Act (FAA) to prohibit mandatory arbitration provisions in claims involving workplace sexual harassment. Spurred by the #MeToo movement—a hashtag that went viral on social media last year to spotlight the prevalence of sexual assault and harassment, particularly in the workplace—the letter states that "[a]ccess to the judicial system, whether federal or state, is a fundamental right of all Americans." It goes on to assert that forcing employees to arbitrate claims involving workplace harassment "disserve[s] the public interest by keeping both the harassment complaints and any settlements confidential."

The letter, signed February 12, 2018, supports a bill—introduced on December 6, 2017, by a bipartisan group of congressional leaders—that would prevent employers from forcing "sex discrimination disputes" into arbitration. Sex discrimination disputes are broadly defined as those involving violations of Title VII of the Civil Rights Act, such as sexual harassment or discrimination. The impact of any congressional action to amend the FAA would be widespread for employers. About 55 percent of private-sector employees (60.1 million workers) are subject to mandatory arbitration provisions, according to a study released by the Economic Policy Institute. The AGs' letter expressed their strong support for "appropriately tailored legislation to ensure that sexual harassment victims have a right to their day in court."

Opponents of the letter argue that amending the FAA to prohibit arbitration for workplace sexual harassment derogates the FAA and could lead to other types of disputes being precluded from arbitration. There also is concern that banning arbitration would treat sexual harassment more favorably than other forms of discrimination and harassment (e.g., race or disability) and undermine the benefits of arbitration—such as efficiency, affordability, and arbitrator expertise—for unproven allegations. In addition, prohibiting the arbitration of workplace sexual harassment disputes could run counter to the interests of individual employees who would prefer the privacy of arbitration to the glare of court litigation.

Although Congress has the authority to amend the FAA, carving out an exception for workplace sexual harassment could create confusion and conflict for employers. Regardless of whether the FAA is amended to bar mandatory arbitration clauses in claims involving workplace sexual harassment, the prominence of the #MeToo movement and the U.S. Supreme Court's pending decision on the enforceability of class action waivers in employment agreements should make employers cognizant of legal changes in the workplace.

Copyright © by Ballard Spahr LLP

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About this Author

Brain Pedrow, Ballard Spahr law firm, employment, labor, and employee benefit dispute lawyer
Partner

Brian D. Pedrow is the Practice Leader of Ballard Spahr's Labor and Employment Group. He represents employers and management in the full scope of matters related to employment, labor, and employee benefit disputes. Mr. Pedrow's practice includes all facets of employment-related litigation, such as discrimination, harassment, retaliation, breach of contract, and employment-based torts. He also has a significant practice representing benefit plans, fiduciaries, and plan sponsors in Employee Retirement Income Security Act (ERISA) litigation arising from benefits eligibility...

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Mark Levin, Ballard Spahr Law Firm, Litigation Attorney
Partner

Mark J. Levin is known for his work in complex commercial, insurance, and class-action litigation, with particular experience in consumer finance litigation, the structuring and enforcement of consumer arbitration clauses, and the defense of insurance companies in class actions. He testified in 2007 for the lending industry before a subcommittee of the U.S. House Judiciary Committee at an oversight hearing on whether mandatory arbitration in consumer contracts is fair to consumers.

Mr. Levin has represented banks in defending against the first private class-action lawsuits under the Federal Trust Indenture Act, nuclear power plant owners in a year-long arbitration against an international insurance consortium, and school districts in a major funding lawsuit to recover state funds. He is currently involved in defending banks, other lending companies, and insurance companies in a wide variety of consumer class actions, including numerous class actions brought under the Pennsylvania Unfair Trade Practices and Consumer Protection Law.

215-864-8235
Noah Goodman, Ballard Spahr Law Firm, Philadelphia, Labor and Employment Attorney
Associate

Noah Goodman drafts federal court memoranda and position statements before administrative agencies. He also conducts research and advises employers on issues related to restrictive covenants, trade secrets, and unfair competition.

Prior to joining the firm, he oversaw a political campaign for a former Philadelphia City Councilman. Mr. Goodman also writes on collective bargaining issues in professional sports and was selected to present his law review comment, The Evolution and Decline of Free Agency in Major League Baseball, at the 28th...

215-864-8610