The House and Senate have passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021. It will go into effect once signed by President Biden. This law will ban forced arbitration and class action waivers  for all claims regarding sexual assault and sexual harassment. This was the House version, which is much better than the original Senate version that limited what was defined as sexual harassment. The version passed covers all sexual harassment cases as we know them.

 
Here’s what it says:

§ 401. Definitions

“In this chapter:

“(1) PREDISPUTE ARBITRATION AGREEMENT.—The term ‘predispute arbitration agreement’ means any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement.

“(2) PREDISPUTE JOINT-ACTION WAIVER.—The term ‘predispute joint-action waiver’ means an agreement, whether or not part of a predispute arbitration agreement, that would prohibit, or waive the right of, one of the parties to the agreement to participate in a joint, class, or collective action in a judicial, arbitral, administrative, or other forum, concerning a dispute that has not yet arisen at the time of the making of the agreement.

“(3) SEXUAL ASSAULT DISPUTE.—The term ‘sexual assault dispute’ means a dispute involving a nonconsensual sexual act or sexual contact, as such terms are defined in section 2246 of title 18 or similar applicable Tribal or State law, including when the victim lacks capacity to consent.

“(4) SEXUAL HARASSMENT DISPUTE.—The term ‘sexual harassment dispute’ means a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.

Ҥ 402. No validity or enforceability

“(a) In General.—Notwithstanding any other provision of this title, at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct, no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.

“(b) Determination Of Applicability.—An issue as to whether this chapter applies with respect to a dispute shall be determined under Federal law. The applicability of this chapter to an agreement to arbitrate and the validity and enforceability of an agreement to which this chapter applies shall be determined by a court, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement, and irrespective of whether the agreement purports to delegate such determinations to an arbitrator.”.

While this doesn’t apply to sex discrimination that isn’t harassment (such as a termination, suspension without pay, denial of promotion or failure to hire where sexual favors aren’t requested), it does apply to harassment due to gender, and to harassment due to sexual orientation, as well as to harassment when sexual favors are requested. If you are singled out for harassment due to either gender or sexual orientation, that is sexual harassment under Title VII and under some state law, such as the Florida Civil Rights Act.

There is a move afoot to ban forced arbitration in other types of discrimination and harassment cases. This is a good start, but it isn’t the end.

Why does it matter? Because arbitration is a secret tribunal, which is bad enough. Arbitration started as a good thing, where both parties chose it as a quicker way to resolve cases. The arbitrators were experts in complicated matters like construction. But it’s come a long way from that.

The way forced arbitration works now is the big arbitration companies contract with corporations to be the arbitration forum they use for employment disputes. While the parties can pick from panel members and veto others, the panels tend to be skewed to pro-employer arbitrators. After all, if Arbitrator A rules against Company B, Arbitrator A is then forever vetoed as a panelist for Company B. And Company B spreads the word. Arbitrator A gets fewer and fewer cases. Goodbye income as an arbitrator.

So it’s in arbitrators’ interests, especially full-time arbitrators, to rule for employers. They don’t care if employees, who will be in front of them once, are upset. They do care if a company that will be in front of them 200 times will be upset and veto them.

I’m not saying all arbitrators think like this. Many are still true neutrals. Heck, I’m an arbitrator. Because of my background representing employees, I’m rarely picked in employment cases because employers think I won’t be neutral (untrue, by the way). Management-side lawyers and HR folks get picked a lot, and can make a nice income from them. 

Under many agreements, employees must pay half the arbitration expenses. Arbitrators are paid by the hour, and filing fees in high dollar cases can be huge. Employees can be forced to shell out thousands of dollars, if not tens of thousands of dollars, just to pay for the arbitrator and filing fee. Court costs a moderate filing fee of a few hundred dollars. Judges are paid by tax dollars, so the parties pay nothing.

I’ve seen too many situations where employment arbitration was basically an expensive kangaroo court. And there’s almost no remedy. No appeal. No ability to challenge most rulings. And because it’s secret, sexual harassment and sexual assault can be kept secret. Court is public. Anyone can attend a trial or hearing. Employers hate that.

Employers love the arbitration system. Love, love, love it. Employees should fight forced arbitration wherever they can. Now is a good time to call your representatives and tell them it’s time to end forced arbitration.