Bill Takes Aim at Forced Arbitration of Sexual Harassment Complaints

Arbitration, long a favored method of handling workplace disputes, would be removed as an option in sexual harassment and gender discrimination cases if a new bill introduced in Congress becomes law.

Source: erhui1979 / DigitalVision Vectors / Getty

Often, employment contracts contain arbitration clauses that require disputes to be settled through arbitration instead of litigation. Also, complaint settlements frequently include nondisclosure agreements that keep claims out of the public eye. The new bill, called the Ending Forced Arbitration of Sexual Harassment Act, is intended to keep harassers from settling claims in secret and then continuing to harass.

The measure has gained bipartisan support. Representative Cheri Bustos (D—Illinois) and Senators Kirsten Gillibrand (D—New York) and Kamala Harris (D—California) are sponsors. South Carolina Senator Lindsey Graham and Representatives Walter Jones of North Carolina and Elise Stefanik of New York are Republican cosponsors.

Even if employers are barred from requiring arbitration, the problem of secrecy may not be solved, according to Stephanie K. Rawitt, a contributor to Nevada Employment Law Letter and attorney with Clark Hill PLC.

“Arbitration is something we have kind of looked upon favorably since the 1930s,” Rawitt says. She says the lawmakers behind the bill “are responding to the rage that I think our society is feeling right now.” Even if arbitration is removed from the picture and claims become lawsuits, claims won’t necessarily “worm [their] way into the public eye,” she says.

The bigger question, Rawitt says, is: What can employers do to make employees understand that there is no tolerance for sexual or other kinds of harassment? Laws already are in place, and employment policies against harassment are common. But it seems they “aren’t doing the trick” since harassment still occurs, she says.

So the problem, at its root, is bigger than the solution proposed by the bill, Rawitt says. She says that even if the bill passes, it may not provide much change because as complaints go through administrative agencies, they’re often settled and may still be kept secret. Plus, she doesn’t think passage of the bill would be a deterrent to a harasser “who probably doesn’t understand what [it] means in the first place.”

As for the effect of the bill, Rawitt says many employers with an at-will workforce don’t have arbitration agreements in place, so they won’t be affected. The bill would affect “the union world,” she says, since a lot of collective bargaining agreements include arbitration clauses.

Of course, employers that do use arbitration agreements would be affected, but Rawitt says her understanding of the bill is that it is aimed at just sexual harassment and gender discrimination complaints.

Juanita Beecher, an editor of Federal Employment Law Insider and attorney with Fortney & Scott, LLC, in Washington, D.C., says she expects opposition to the bill because employers want employees to arbitrate employment disputes. Also, the U.S. Supreme Court has held that claims made under Title VII of the Civil Rights Act of 1964, the law that outlaws sex discrimination and sexual harassment, can be covered by arbitration.

“Arbitration tends to be more employer[-]friendly, less expensive, and less likely to get press attention,” Beecher says, adding that employers that use arbitration “are not necessarily trying to protect harassers but rather [trying] to protect [themselves] from liability.”

Backers of the bill hope to find support in the employer community. Beecher points out that Graham specifically asked the U.S. Chamber of Commerce and the Business Roundtable to support the bill during a press conference announcing the measure.

Carita Austin, a contributor to Indiana Employment Law Letter and attorney with Faegre Baker Daniels LLP in Indianapolis, Indiana, says the use of arbitration clauses “has been in flux in recent years as a result of differing administrative agency interpretations and differences within the circuit courts.”

“Employers generally favor arbitration clauses because they keep litigation costs down and provide for stability in their business, including with workplace disputes involving wage and hour claims,” Austin says. “However, should this bill pass, it would certainly provide clarity with regard to the handling of sexual harassment claims in the workplace . . . versus the current uncertainty within individual courts and administrative agencies, and employers [that] use arbitration agreements will have to respond accordingly[,] as they do to any other federal legislation.”