Legal Alert

Attorneys General Seek to Ban Mandatory Arbitration for Workplace Sexual Harassment

February 27, 2018

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.

Ballard Spahr's Labor and Employment Group regularly assists employers in developing anti-harassment policies, anti-harassment training, investigations of sexual harassment, and defense of sexual harassment claims under state and federal law. The firm's Consumer Financial Services Group pioneered the use of pre-dispute arbitration provisions in consumer financial services agreements.

Copyright © 2018 by Ballard Spahr LLP.
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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

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