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Companies Can No Longer Use Arbitration for Harassment and Assault Cases

On Behalf of | Apr 7, 2022 | Arbitration, Employment Contracts, Sexual Harassment |

Any partisan bill is newsworthy in today’s political landscape. Still, President Joe Biden made news by signing the bipartisan Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 on March 3, 2022. This law ends companies’ use of arbitration to handle sexual assault or sexual harassment claims in the workplace. Critics claimed that this process limited the worker’s options for seeking justice and unfairly favored the company in these specific instances. Companies can still use arbitration to address many other issues.

Why was it used?

Arbitration is generally considered an effective way to address claims without going to court. It is generally less expensive, faster, more straightforward, and provides closure on a dispute that could be appealed if litigated. Companies also liked that the details were kept private rather than tried in a public court of law.

In light of the #MeToo movement call for this change and Elizabeth Warren’s takedown of Michael Bloomberg during a presidential debate, arbitration became synonymous with coverups by companies wishing to avoid bad press and enabling bad behavior by those in power since there were no convictions, or at least no notoriety of a hefty public settlement for bad behavior. On hand for Biden’s signing ceremony was former Fox News Anchor Gretchen Carlson, who accused CEO Roger Ailes of making unwanted advances and damaging her career. She also testified before Congress about the need for this new law.

What the law means for victims

Women and others who endured harassment and assault can now have their day in court if they choose, rather than being forced to arbitrate. Moreover, the law is retroactive, which means that the 60 million people who signed forced arbitration agreements (perhaps without realizing it) during their onboarding process.