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Arbitration of sexual discrimination, sexual harassment, and/or sexual misconduct claims - What are your thoughts?

What are your thoughts on pending state legislation banning the arbitration of sexual discrimination, sexual harassment, and/or sexual misconduct claims in the workplace? Will such legislation help ameliorate the "black eye" that mandatory arbitration has in the employment arena? Is such legislation pre-empted by the FAA? Do these statutes improperly elevate only these kinds of claims over other anti-discrimination or workplace protection claims?

Please provide your thoughts/comments below.

Comments (9)

Southland Corp. v. Keating, 465 U.S. 1, holds that Congress intended the FAA to pre-empt state anti-arbitration. So, these state law efforts are a waste of resources that could be better used to lobby Congress (that will likely be in under Democratic control in January).

But why limit the proposed legislation to discrimination and harassment based on sex? Why not pass a federal law excluding from the FAA all pre-dispute arbitration agreements between employers and employees? Congress certainly intended that in 1925. Commerce Secretary Herbert Hoover testified that “[i]f objection appears to the inclusion of workers' contracts in the law's scheme, it might be well amended by stating ‘but nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in interstate or foreign commerce.'” (That is the current formulation of section 1 of the FAA that five justices refused to give effect to in Circuit City v. Adams, 532 U.S. 105.)

Excluding individual employment agreements from the FAA would make US arbitration law more consistent with international norms. This amendment would also have no effect on arbitration under collective bargaining agreements, which promote labor peace.

William G. Bassler:


Jeff Zaino's question raises a question of central importance to the law of arbitration: subject matter inarbitrability. When can the legislature prohibit arbitration of a claim? The state is certainly within its right to determine as a matter of public policy that claims of sexual misconduct, sexual discrimination and sexual harassment are inarbitrable. And considering today's environment such prohibition might be advisable.
But surely such efforts are going to go nowhere in light of the Supreme Court's consistent and firm determination that statutory claims may be the subject of an arbitration agreement( see Gilmer v. Interstate/Lane Corp.500 U.S. 20 (1964)) and the Court's equally firm rejection of efforts by the States, notably California to limit the reach of arbitration agreements.
The preemption of the FAA reigns.( See Preston v. Ferrer, 552 U.S. 346 ;Buckeye Check Cashing Inc.v. Cardegna, 546 U.S. 440 (2006);Doctor's Associates, Inc. v. Casaroto, 517 U.S. 681 (1996)

Anonymous:

I get the point, but do not agree with it. It does not speak to either the fairness of the process or the fairness of the result. It does not make a meaningful distinction between claims of this type and other workplace claims. With respect to federal claims, the FAA almost certainly pre-empts such statutes. Finally, whether mandatory arbitration of employment claims has a "black eye" depends on whom one asks.

Howard R Broadman:

On of the reasons people chose arbitration is that the Court systems are a mess. If the legislature is going to force people into the Court system, perhaps they should try to fix the system they are forcing people into against their will. The legislature incorrectly assumes that only defendants want arbitration.

Deanne Wilson:

This type of legislation is also pending in NJ. Really a double-edged sword. First, many plaintiffs do not wish to publicly litigate their claims. Arbitration provides the perfect alternative for them. Second, employers may be willing to pay more in ultimate settlement of a claim if an arbitration rather a litigation is pending due to the confidentiality of the arbitration. This aspect may also be important to the claimant.
I haven't read the legislation so I am unable to comment with certainty but it appears facially that there may be several constitutional issues with such a statute, not only with the FAA, but with freedom of contract, etc. And, it certainly does draw a line between these types of claims and other employee claims; but that is what has been happening generally over the last couple of years, whether for better or for worse remains to be seen...

Judge Gerald Harris:

It is within the province of the Legislature to make a value judgment as to whether this particular type of offense warrants a restriction on collectively bargained for arbitration. Such legislation would, indeed, affect the perception, however unjust, that workers are being unfairly deprived of their day in court when victimized by workplace misconduct if they are compelled to arbitrate their claims. While the FAA promotes arbitrability it would not prevent the state from carving out such an exception.

Anonymous:

While adjustments to the current system may be worthwhile, proposed legislation banning the arbitration of workplace sexual misconduct claims is an overcorrective. There is no doubt that the mandatory arbitration of such claims, when coupled with one-sided confidentiality provisions, and onerous penalties on the employee for violating these provisions, can result in substantive injustice. As one example, an employee bringing such claims may be prohibited by a confidentiality clause from seeking the testimony of corroborating witnesses and may be at the mercy of an arbitrator who may or may not be willing to lift such restrictions – while the employer simultaneously has free reign to contact anyone it chooses. This is the sort of circumstance that gives arbitration a “black eye” in some quarters, and in this #MeToo era, the desire for a corrective is very understandable.

But there are many other situations in which the employee and the employer equally prefer arbitration, both for reputational reasons, and prohibiting arbitration in such cases seems needlessly restrictive. So at most, legislation should prohibit the mandatory arbitration of workplace sexual misconduct claims. But even that may be overbroad; there may well be other correctives that are sufficient while using even lighter touches, such as legislation that prohibits arbitration clauses (and related contractual provisions) from restricting the right of any party to seek, or of any nonparty to provide, evidence in cases like these.

As for whether such legislation elevates these kinds of claims over other anti-discrimination or workplace protection claims, the answer is unquestionably yes, but whether that is appropriate given our current cultural climate is a fair matter for debate. Arguably workplace claims (of any sort) may deserve more protection than non-workplace anti-discrimination claims because workplace claims, more than most others, tend to arise out of agreements which intimately impact the employees’ lives but over which the employees often have almost no control.

Why time’s not up for mandatory arbitration, an article by Steven Certilman:

file:///C:/Users/zainoj/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/5ZEGBU19/certilman%20final.pdf

Kevin Callahan:

The use of arbitration clauses in the settlement of sexual harassment claims in the workplace has been controversial for some time. This is largely because of the negative perception that such arbitration clauses silence victims of sexual harassment in favor of corporations who are spared public embarrassment. New York's legislation banning the arbitration of sexual discrimination seems well-intentioned in light of this and arguably is a step in the right direction in altering public perception of arbitration as a corporate tool to mask bad behavior. While the effect of this NY legislation on public perception is important, its effect on the victims themselves should be considered as well. It is commonly understood that some victims of workplace sexual harassment don't come forward because they do not want to face public scrutiny. Arbitration can be seen as a beneficial resource to such people given the comparatively more private nature of such proceedings. While the NY legislation does not seem to ban the use of arbitration in settling workplace sexual harassment claims, just the requirement that employees agree to mandatory arbitration in the settlement of such claims, the messaging behind it certainly discourages its use. As a result, an unintended effect of the NY legislation could be to discourage victims from coming forward.

In reality, the NY legislation will most likely change little as it will probably be preempted by the FAA due to language that it will not apply where inconsistent with Federal Law. Such a likelihood is compounded by the Supreme Court's historical deference to the FAA. Action taken by Congress may ultimately give strength to the NY legislation should they amend the FAA to fall in line with the sentiment of the NY legislation, but until then it bears little teeth.

Given the fact that mandatory arbitration clauses generally don't specifically refer to sexual harassment but cover all discrimination claims, the NY legislation does seem to arbitrarily single out sexual harassment claims. This probably has less to do with any notion of an inherent importance of sexual harassment claims over other workplace discrimination claims and more to do with politics and current events. The likelihood of successful passage of the NY legislation was markedly increased due to the momentum of the Me Too movement globally and the desire of politicians to score political points with their constituents in its shadow. Given current events, legislators may have seen an opportunity to effect change for the better and simply took what they thought they could get, at least for the time being. While the NY legislation currently acts like more of a statement of public support for sexual harassment victims in the workplace, it is a potential stepping stone for an eventual ban on mandatory arbitration clauses in the settlement of any workplace discrimination claim generally.

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