Employers May No Longer Force Sexual Assault and Harassment Victims into Arbitration

In February 2022, the U.S. Congress passed a bill that prevents companies, universities and other institutions from requiring claims of sexual assault and harassment to be submitted to mandatory binding arbitration. President Joe Biden, who has previously stated that the bill “advances efforts to prevent and address sexual harassment and sexual assault, strengthens rights, protects victims, and promotes access to justice,” is expected to sign it into law soon.

The “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act,” known colloquially as the #MeToo bill, provides that plaintiffs alleging sexual assault or harassment can bring their claims to a public court even if they had previously signed or accepted an arbitration agreement. Introduced in 2017 at the height of the #MeToo movement, the bill garnered broad bipartisan support for addressing important issues of sex-based discrimination in the workplace. The legislation is retroactive, which means that all previously signed arbitration agreements no longer apply.

A more expansive version of the bill, which would have more generally addressed forced arbitration clauses that covered other employment and wage claims, was a non-starter for many Republican legislators who view arbitration, incorrectly, as generally a fair, effective and less costly mechanism for conflict resolution than state or federal courts.

However, studies of arbitration cases and awards actually show that arbitration is far from unbiased and arbitrators overwhelmingly favor employers. Discovery, the process by which litigants gather evidence, in arbitrated disputes is restricted compared to public courts, giving employees less ability to gather evidence. Arbitrators are paid by employers, favor repeat customers, and award significantly less damages to employees – typically only 20 percent as much as a similarly situated worker in a case heard by a public court.

Currently, more than half of non-union, private sector employees (approximately 60 million workers) are subject to mandatory arbitration clauses that typically include a class action waiver to discourage employees from pursuing their claims both individually and on behalf of a group of workers. Significantly, many workers are not even aware that they “agreed” to mandatory arbitration, as the clauses are often hidden in the small print of employment contracts or employee handbooks.

Senate Majority Leader Chuck Schumer called the bill “one of the most significant changes to employment law in years” on the Senate floor and it has been

hailed as one of the most significant changes to labor law in decades. But while the Act is an important victory for workers, it is a limited one. The overwhelming majority of employee-initiated legal disputes do not involve sexual assault or harassment and such allegations represent only an extremely small percentage of the federal judicial docket.

Employee advocates continue to urge Congress to rethink forced arbitration in all employment disputes and to allow employees the opportunity to address the significant issues in other types of employment and wage discrimination in the judicial system.

If you have been sexually assaulted or harassed at work or feel like you have been discriminated against, the employment lawyers at Willig, Williams & Davidson can be of assistance to you. Contact Ryan Allen Hancock for a free consultation at 215.656.3679 or rhancock@wwdlaw.com.

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