By Mark Carey
Employers get so used to their own default employment practices, like drug addiction, they cannot stop “using” even when they violate federal law. Employers are still demanding employees who assert sexual harassment claims must file their claims in arbitration because they think employees are too stupid to understand what forced arbitration is and what the new federal law against forced arbitration requires. Shame on them.
On March 3, 2022, President Biden signed into law the federal ban on forced arbitration in sexual harassment and sexual assault cases. I wrote a blog article entitled How to Manage Sexual Harassment Cases After the Federal Ban on Forced Arbitration.
I have repeatedly confronted this issue in several cases. Each time the employer, with a poker face demeanor, makes demands that the employee must pursue their claims through arbitration and not in court. Employers tell me this farcicle “after” they receive a copy of the federal court complaint we are about to file which discloses a parade of bad acts of sexual harassment, gender discrimination and pregnancy discrimination. Essentially, we draft complaints that are an embarassment to the company and pose a PR problem. These employers are represented by seasoned employment law counsel whom I have known for years, yet they believe that the new law does not apply to the case. In response, I quickly send them the most recent case decisions from the relevant federal courts which indicated that their clients do not have an argument to stand on and the ban on forced arbitration in sex discrimination cases controls.
Here are a few court pronouncements that I have sent to my colleagues to remind them about what the law actually provides. “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “EFAA”), Pub. L. No. 117-90, 135 Stat. 26,codified at9 U.S.C. §§ 401–02, which amended the Federal Arbitration Act (“FAA”), and which President Biden signed into law on March 3, 2022. As pertinent here, the EFAA defines a “sexual harassment dispute” as “a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.” 9 U.S.C. § 401(4). At the election of a person alleging “conduct constituting a sexual harassment dispute,” the EFAA makes pre-dispute arbitration agreements unenforceable “with respect to a case which is filed under Federal, Tribal, or State law and relates to … the sexual harassment dispute.” “The Federal Arbitration Act (‘FAA’), which was enacted in ‘response to widespread judicial hostility to arbitration agreements,’ requires courts to ‘place arbitration agreements on an equal footing with other contracts…and enforce them according to their terms.” Sounds straight forward, right?
Employers make two routine arguments. First, if it is not sexual harassment specifically then the case goes into arbitration. Second, if it is sexual harassment “of some form”, which I will explain in a moment, then the case should be split in piecemeal litigation; the sexual harassment case can stay in court, but the rest of the case must be filed in arbitration. Fortunately for employees, both arguments fail and that is what the courts have held.
1. Sexual Harassment is Broadly Defined
The term sexual harassment was not defined in the statute which means it has broad coverage to almost every form of sex based and gender-based discrimination. This means that sexual orientation claims cannot be forced into arbitration. This also means that gender discrimination claims cannot be forced into arbitration. Further, the term is so broad that it covers every form of pregnancy discrimination, including paternal leave rights. Remember, if the claim is rooted in sex/gender employers cannot force arbitration in courts. I am summarizing what the federal courts have held around the country.
We also discovered that the Courts will deny a motion to compel arbitration of a sex claim in court if the complaint alleges a hostile work environment claim. A hostile work environment claim can involve sex discrimination, and the mere presence of the claim in the complaint allows the Court to easily qualify the sex-based claim as sexual harassment and deny arbitration.
2. The Entire Case is Exempted and Allowed to Move Forward
The second issue that employers try to shove in my face is that only the sex/gender claims can be asserted in court, but the rest of the case must be filed in arbitration. Typically, under the Federal Arbitration Act, “if a dispute presents multiple claims, some arbitrable and some not, the former must be sent to arbitration even if this will lead to piecemeal litigation. But the FAA’s mandates in support of its ‘liberal federal policy favoring arbitration agreements’ may be ‘overridden by a contrary congressional command.’” (Source) However, when a complaint presents a well pleaded sexual harassment claim it makes the an arbitration clause unenforceable as to the other claims asserted in the case. That is a big deal for employers and provides a lot of leverage for employees. Employees must consider this factor when preparing their claims for severance negotiation purposes and for filing in court.
According to Judge Engelmayer, a federal judge in New York, “[i]n its operative language, the EFAA makes a pre-dispute arbitration agreement invalid and unenforceable ‘with respect to a case which is filed under Federal, Tribal, or State law and relates to the …sexual harassment dispute.’ 9 U.S.C. 402(a). This text is clear, unambiguous, and decisive as to the issue here. It keys the scope of the invalidation of the arbitration clause to the entire ‘case’ relating to the sexual harassment dispute. It thus does not limit the invalidation to the claim or claims in which that dispute plays a part.” (Source)…The statutory text of the EFAA makes the corollary true here. Congress’s choice to amend the FAA directly with text broadly blocking enforcement of an arbitration clause with respect to an entire case relating to a sexual harassment dispute reflects its rejection in this context of the FAA norm of allowing individual claims in a lawsuit to be parceled out to arbitrators or courts depending on each claim’s arbitrability.” (Source).
So, the bottom line here is that employers should back off their high and mighty twig of a tree stump and stop violating federal law banning forced arbitration.
If you would like more information about this issue, please contact our employment law attorneys at Carey & Associates, P.C. at 203-255-4150 or email to info@capclaw.com.
