Bill prohibits mandatory pre-dispute arbitration agreements at the election of the person alleging sexual harassment
By Barry Bridges
BridgeTower Media Newswires
PROVIDENCE, RI — Employment lawyers are evaluating the impact of a federal bill that, upon President Biden’s expected signature, will prohibit employers from mandating arbitration for sexual harassment and sexual assault claims, with some predicting that Congress may ultimately pass similar legislation sending other types of workplace issues to the courtroom.
H.R. 4445, the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021,” was approved in the U.S. House of Representatives on Feb. 7 and passed in the Senate on Feb. 10. The White House has indicated Biden’s support for the measure.
The bill amends the Federal Arbitration Act to prohibit the enforcement of mandatory pre-dispute arbitration agreements at the election of the person alleging the conduct “or the named representative of a class or in a collective action alleging such conduct.”
Michael D. Pushee, an employee-side attorney in Providence, says that option of pursuing a claim via arbitration or the courts is an important one for employees, because it gives them the “power to control the narrative.”
“Some may not want the publicity or scrutiny associated with alleging claims of sexual harassment. The privacy that comes with arbitration can provide that,” he says.
On the other hand, an employee who wants to take a public stand against an employer — for whatever reason — can proceed in federal or state court and choose a jury trial.
“With electronic docketing and social media, court filings are now more public than ever,” Pushee observes.
Jessica Schachter Jewell, a business-side practitioner with Nixon Peabody in Boston and Providence, adds that “the usual discourse” is that arbitration is pro-employer and employees favor litigation. But Jewell says she doesn’t think that is always the case, “as arbitration offers more privacy and is faster than going through the courts.”
The bill also explicitly states that any questions on whether the act applies to a particular claim will be decided by a court, not an arbitrator, “irrespective of whether the agreement purports to delegate such determination to an arbitrator.”
“That is important because it allows employees who file a lawsuit to remain in federal or state court and have that court decide whether the claims are subject to arbitration,” Pushee says.
That is opposed to a situation in which a lawsuit is filed while a parallel arbitration proceeding is also moving forward just to decide whether arbitration is even permissible. “It streamlines things for the employee,” Pushee explains.
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Tip of the iceberg?
Boston’s James W. Bucking, an employer-side attorney at Foley Hoag, characterizes the act on its face as a “fairly narrow carve-out” pertaining to a limited number of claims.
However, he envisions a potential “slippery slope” effect that the law could have on mandatory arbitration provisions in other contexts.
“I don’t see how you can say, for example, that you need to publicly call out sexual harassment but not racial harassment,” Bucking says. “This could serve as a ‘foot in the door.’ It’s really hard to imagine that there won’t be future carve-outs, and I think that racial discrimination and transgender discrimination could be the next developments at the federal level.”
Pushee says that in light of the bill’s definition of sexual harassment as “a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law,” the bill would already seem to encompass not only sexual harassment claims in the traditional sense, but other sex-based harassment claims as well.
“Under Title VII and Rhode Island’s Fair Employment Practices Act, unwelcome conduct includes harassment based upon sexual orientation, gender identity and pregnancy,” he says. “It appears all of these types of claims would be covered by H.R. 4445.”
Pushee agrees with Bucking that more federal action could be on the horizon.
“The legislation certainly isn’t the death knell of employment arbitration agreements, at least at this point. But I wouldn’t be surprised to see this bleed into other areas of employment claims down the road, such as race or ethnicity discrimination claims,” he says. “The White House has even suggested that more legislation like H.R. 4445 could be coming relating to other forms of discrimination or even wage and hour issues.”
But Jewell isn’t so sure the bill portends a broader trend.
“I think this particular bill is a direct product of the #MeToo movement, and I don’t know that we have the same impetus now for other types of claims. If it is a beginning, I don’t think it’s something that will snowball quickly,” she says.
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Potential uncertainties
Michael A. Gamboli, a business-side attorney at Partridge, Snow & Hahn in Providence, describes the act as a “gaping departure” from the otherwise broad protections contained in the Federal Arbitration Act.
“The FAA makes it largely impossible [for an employee] to avoid mandatory arbitration and goes so far as to invalidate any state law to the contrary under the Supremacy Clause of the Constitution,” Gamboli says.
He observes that the measure also upends the 2018 U.S. Supreme Court decision in Epic Systems Corp. v. Lewis, in which the justices held that a mandatory arbitration agreement forcing individual arbitration of employment claims and waiving the right to proceed as a class action was enforceable.
The legislation presents a bit of a shift in that federal law is outpacing state laws on the topic, Gamboli says.
“For example, with sexual orientation being a protected class, state law typically evolves more quickly than federal law. Here, only a few states have passed legislation purporting to ban forced arbitration of sexual harassment or other employment claims, so passing the pending legislation would be a rare case of the federal law evolving more quickly than state law in the employment arena,” Gamboli says.
But the three-page bill does present some unanswered questions at this early stage.
For example, Jewell points to workplace claims encompassing allegations of different types of wrongful conduct.
“One wrinkle that Congress didn’t necessarily foresee is that while the act applies to a limited type of employee claim, some cases may have multiple causes of action against an employer,” she says. “So it’s a very simple bill on the one hand, but I can foresee some logistical issues where there are multiple claims. Will some be subject to arbitration while others go to court? It may be that you have to proceed in two different forums.”
That dynamic could prove challenging, Bucking agrees, noting that it’s already common to have different sorts of claims.
“It’s unclear whether the courts will say, if there are 20 claims and one is for sexual harassment, whether arbitration is forbidden for all or whether only the sexual harassment count will need to be litigated in court. That remains to be seen,” he says.
Employers will have to give some thought in reviewing their policies and should be proactive early in deciding on the kind of position they want to take, Bucking adds. On the claim-splitting issue, for example, a company may want to specify that an employee will take a sexual harassment allegation in court with everything else going to arbitration, or may simply decide that everything should go to court.
“Employers may approach it differently, but every company should look at their workforce and the nature of their claims history and decide what they want to do,” Bucking says.
Elsewhere, Pushee identifies ambiguity in Section 3 of the bill, which states that it shall apply to any dispute that “arises or accrues on or after the date of enactment of this Act.”
“What does that mean? Does the claim arise or accrue when the harassment first happens or does it arise when the employee first complains about it?” Pushee asks.
That could come up in a scenario in which conduct has been occurring over months or even years, with some happening before the enactment and some after.
“Does that mean the employee must arbitrate the older conduct, but is allowed to file a federal lawsuit as to the recent misconduct? There is some uncertainty there,” Pushee says.
