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Last week, the Attorneys General (“AGs”) in each state and U.S. territory all announced their support for ending mandatory arbitration of sexual harassment claims. They wrote Congress that the “secrecy requirements of arbitration clauses” as applied to sexual harassment claims “disserve the public interest … [by creating] a culture of silence that protects perpetrators at the cost of their victims” and that victims “have a right to their day in court.”
The AGs referred to bipartisan legislation, currently being considered by the House and Senate, titled the “Ending Forced Arbitration of Sexual Harassment Act.” Note: The current version of the companion bills seek to amend the Federal Arbitration Act (FAA) to preclude the arbitration of all sex discrimination claims, not just sexual harassment claims.
The proposed legislation does not address what happens if an employee brings a sexual harassment claim and other employment claims (i.e., will the employee have to proceed in court on the harassment claim but in arbitration on the other claims?). The bills are currently pending in separate committees in the House and Senate, and the committees must approve the bills before the full House and Senate can take up the issue. The process could take months or longer as there is no timetable for any action by Congress.
At least one large employer has acted in advance of federal legislation. In December 2017, Microsoft Corporation announced it would end mandatory arbitration of sexual harassment claims; other employment claims would remain subject to arbitration. The AGs commended Microsoft for its decision. Given the momentum of the #MeToo movement, it is possible that other employers will follow Microsoft’s lead.
This development follows closely on the heels of the tax reform legislation enacted in December 2017, which makes confidential payments or settlements including any related attorney’s fees for sexual harassment or sexual abuse nondeductible by employers. Please see my colleague Andrew McLaughlin’s blog post for full details.