Recently the United States Senate amended the Federal Arbitration Act (the “FAA”) by passing S. 2342, known as “The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act” (the “Amendment”). The Amendment was passed with bipartisan approval and is expected to be signed into law by President Biden. Senate Judiciary Chair Dick Durbin (D-IL), stated the overall purpose of the Amendment:

“Forced arbitration clauses requires disputes to be decided in secret proceedings where the deck is often stacked in favor of corporations and repeat players. For Americans who have been sexually assaulted or harassed, forced arbitration clauses not only deny survivors a day in court, they require the misconduct be concealed from public view. And that allows the abusers to commit more abuse… The bill before us today would give survivors of sexual assault and harassment a choice to go to court instead of being forced into arbitration under the fine print of contracts signed before the dispute arose…” 

Employers often require their workers to sign arbitration agreement where workers are forced to waive their right to sue in court when legal rights provided them by employment laws are violated in the workplace. Instead, the worker must resolve legal disputes through a private binding arbitration process. Arbitration requires parties to use a secretive confidential process where a privately person, typically a practicing lawyer or retired judge, is retained to serve as an arbitrator who functions like a judge outside of court. Critics of arbitration argue the process stacks the odds against the employee because professional arbitrators typically get repeat business from big business employers as compared to individual employee claimant who will typically use an arbitrator on only one occasion during their life. Common sense dictates that that if an arbitrator wants repeat business from an employer, then he or she must avoid hurting that same employer in their corporate pocketbook. According to an article published in May 2017 on the site, “Workers in mandatory arbitration win about one fifth of the time (about 21 percent), which is 59 percent as often as they win in federal courts and 38 percent as often as they win in state courts. In other words, employees are 1.7 times more likely to win in federal courts than in arbitration and 2.6 times more likely to win in state courts than in arbitration. Median damage awards in forced employment arbitration are $36,500, compared to $176,400 in federal court employment discrimination cases and $85,600 in state court non-civil rights cases.”

Against this backdrop the new Amendment severely limits the use of forced arbitration when it comes to “sexual harassment disputes.” Specifically, the Amendment defines “sexual harassment dispute” as “a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.” The statutory language of the Amendment does not expressly include any mention of “retaliation claims.”  However, an employee may have a sexual harassment related retaliation claim against their employer under New Jersey’s Law Against Discrimination (the “LAD”) if: (1) The Plaintiff-Employee engaged in a activity or was a member of a class protected under the LAD, (2) The Plaintiff-Employee was subjected to retaliation in the form of an adverse employment action at the time or after the protected activity took place, (3) there was a causal connection between the retaliatory adverse action and protected activity, sufficient to show that the protected activity played a role in the decision and made an actual difference in the Defendant-Employers decision. N.J.S.A. 10:5-12(d). Under the LAD, sexual harassment or assault constitutes one form sex discrimination, rendering it unlawful for an employer to retaliate against an employee who objects to sex discrimination by demoting them, reducing job duties, termination, or reassignment.

It is important to consider other practical considerations related to the Amendment such as employers having to review and revise current employment contracts or arbitration agreements to account for the Amendment once it is signed into law. Keep in mind, the Amendment does not apply to all instances of workplace sex or gender discrimination. For example, a female employee who alleges their employer failed to promote her because her gender, would remain subject to an arbitration agreement because her claim does not relate to sexual harassment. Furthermore, the Amendment is not applicable to harassment claims based on other protected class groups based on the characteristics of race, national origin, religion, age, disability, or sexual orientation.

If you have been or are the victim of sexual harassment in the workplace or have been retaliated against for opposing such harassment, call the attorneys at Mashel Law (732) 536-6161 or fill out the contact form on this page for immediate help. Mashel Law, located in Marlboro, New Jersey, is dedicated to protecting the rights of its employees

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