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After a major legal change to arbitration, why employers need to emphasize training

Daniel R. Fishman
Daniel R. Fishman, Esq.
Daniel R. Fishman, Esq., is an attorney with the Boston employment law firm Morgan, Brown & Joy. Daniel, an employment litigator, defends and advises employers on the often complex employer-employee relationship, provides practical employment advice to executives, in-house counsel, and human resources professionals. Handling virtually every type of workplace allegation, Daniel’s experience includes wage and hour, non-competition agreements and enforcement, discrimination, harassment, employee leave arrangements, and other important issues surrounding working relationships.

A newly enacted federal law, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “Act”), will fundamentally change the dispute resolution process of sexual harassment claims in many workplaces—and HR has to be prepared.

The Act prevents the enforcement of arbitration provisions against an employee alleging sexual harassment, a move that will likely increase the number of sexual harassment claims litigated in federal and state courts across the country. Additionally, successful plaintiffs will likely see larger damage awards than they otherwise would recover in arbitration.

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As a result, employers should invest in appropriate anti-harassment policies and quality harassment-prevention training for their workforces, especially supervisors and managers. This investment should reduce the inappropriate conduct that results in these claims and allow employers to remedy these situations before incidents become litigation.

Relevant background

Historically, employers have used employment arbitration agreements in response to an increase in employment-related litigation. Employers generally find that private arbitration, as opposed to court litigation, results in faster and less expensive dispute resolution. Additionally, many arbitration agreements contain employee waivers of any right to bring class actions against their employer, or contain so-called delegation clauses, which require the arbitrator, rather than a court, to decide what claims are subject to the arbitration provision. For decades, the Supreme Court has repeatedly upheld the enforcement of arbitration agreements.

What is in the Act

The Act prevents a court from enforcing an arbitration agreement against a party alleging conduct that constitutes either a “sexual harassment dispute” or a “sexual assault dispute.” The Act also invalidates class-action waivers and delegation clauses for these two types of disputes.

See also: A pushback on mandatory arbitration

“Sexual harassment dispute” is broadly defined to mean “a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal or State law.” Based on current case law, this likely includes any disputes relating to:

  • unwelcome sexual advances;
  • unwanted physical contact that is sexual in nature;
  • unwanted sexual attention and comments;
  • conditioning professional or other benefits on sexual activity; or
  • retaliation for rejecting sexual attention.

What is not in the Act

This Act does not apply to discrimination claims based on other protected characteristics, such as race or religion, or other types of retaliation claims. Nor does this law apply to other sex discrimination claims unrelated to sexual harassment, or to disputes about other contractual provisions that have drawn recent public attention, like non-disclosure agreements.

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What HR professionals should do

The Act will move more sexual harassment claims from arbitration into state and federal courts, which will result in more public testimony, discovery and cases submitted to a jury. These realities have significant costs for employers defending these claims, from legal fees and potential jury awards to public relations and employee relations issues. Given these significant costs, an ounce of prevention is now worth a lot more than a pound of cure.

Related: HR, now is the time to take action on inclusion

The first step in this prevention is a written anti-harassment policy. Many states, such as Massachusetts and Connecticut, require employers to maintain written anti-harassment policies that include specific content. Employers in states that do not mandate anti-harassment policies are still advised to maintain such policies, which should define what constitutes sexual harassment and other types of unlawful harassment. The policy should outline the company’s complaint procedure, including that the employer will thoroughly investigate the facts and circumstances of all complaints and take appropriate corrective action. The policy should also explicitly define unlawful retaliation, and state that the company will not tolerate retaliation in any form. Once drafted, this policy should be accessible to both current employees and new hires. Employers should consult employment counsel to ensure anti-harassment policies are compliant with local laws and distributed to employees per legally mandated notice requirements.

Next, employers should actively train employees on their anti-harassment policies. States like California and New York require training, but anti-harassment training has significant benefits beyond compliance. Regular anti-harassment training prevents the underlying improper conduct that can create sexual harassment claims by increasing awareness. Training employees on the available complaint avenues increases the chance that an employee will report allegations of harassment and allows employers to respond to any inappropriate conduct before it grows into a legal claim. In some situations, the failure of an employee to report unlawful harassment may prevent that employee from prevailing on a harassment claim. This defense is only available if the employer exercised reasonable care to prevent and correct harassing behavior, like maintaining an anti-harassment policy with a specific complaint procedure.

Supervisor-specific training is particularly important. Training supervisors on how to respond appropriately when an allegation is raised will allow employers to remedy situations when employees make internal complaints. Moreover, unlike harassment from peers, employers are strictly liable for unlawful harassment that a supervisor perpetrates on his or her subordinate.

Anti-harassment trainings cover multiple complex and sensitive subject matters that can be difficult to talk about. If handled improperly, these trainings can be detrimental to an employer, resulting in the opposite of the intended effect and undercutting otherwise available defenses. Employers should consult employment counsel before conducting anti-harassment training in the workplace and when implementing anti-harassment policies.