In “4 Questions After Biden Curbs Mandatory Arbitration Pacts,” Law360 addressed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which President Joe Biden signed into law on Mar. 3, 2022. Labor and employment partner David Woolf discussed the law’s scope and whether suits with ancillary discrimination or wage claims will have to be broken up.
Woolf said the bill is a “natural evolution” of both the #MeToo movement and the increasing focus in recent years on arbitration agreements. “For a while, the Supreme Court has been very pro-arbitration agreements,” he explained. “I think people thought of them as just a cheaper and more efficient way to deal with litigation matters without any loss of substantive rights or protections for the employees. But there are certainly segments of the population that felt like, ‘No, in fact, these do limit people’s rights, and people shouldn’t be required to arbitrate things that are particularly important to society’ as opposed to an individualized dispute.”
Regarding if complex hybrid cases will be split up, Woolf said there is a jurisdictional question about whether claims can be bifurcated across different forums. That threshold question, he observed, “will be one of the first things that gets worked out” when judges interpret the new law.
The publication reported that the language in the law says no predispute arbitration agreement, including those containing class action waivers, will be enforceable “with respect to a case” filed under federal or state law that relates to sexual assault or sexual harassment. “It talks about ‘with respect to any case’ as opposed to ‘with respect to any claim.’ So, I guess there’s a threshold question of can you even split up the case if you’re the employer,” Woolf stated.
“If you wanted to, could you say, ‘We’re going to defend the wage-and-hour piece of this in arbitration pursuant to the arbitration agreement, but we get that you can be in court as to the sexual harassment piece of it, and we’re just going to split it?’” Woolf added. “I think there’s a real debate, and everyone is kind of waiting to see how that shakes out about whether it can be split in the first place.”
Even if employers have the option of enforcing arbitration agreements for claims that are entirely unrelated to allegations of sexual harassment or sexual assault, Woolf noted that they may not want to do so and might instead opt to litigate the entire case in one forum.
“It’s just more expensive. I know there are some people that think an employer may want to tie up an employee by litigating in two venues, but I think most of the time the employer just wants its day in court or its day before a tribunal,” Woolf said. “And to split it up and do it in two venues doesn’t help most of the time. So, if it really does arise out of and there’s really a claim of sexual harassment, I think you’re going to see a lot of employers just say, ‘Let’s just go back and litigate this in court.’”
A separate legal question that could arise, according to Woolf, is at what point do harassment allegations that may be scattered in a complaint but are not at the core of the lawsuit and may not pass muster under strict federal standards trigger the arbitration ban?
“Let’s say it’s inherently a gender discrimination case [that] revolves around a termination or maybe a failure to promote, and there’s a mention of the fact that the person experienced something that from a layman’s perspective would be called sexual harassment but doesn’t rise to the level of sex discrimination under Title VII,” Woolf outlined. “And the question is going to be [does] … sprinkling in allegations of sexual harassment in a complaint that’s really more about something else … mean that you now have a case that ‘relates to the sexual assault dispute’ or the sexual harassment?”
The full article is available for Law360 Employment Authority subscribers.