Employees often wonder if they signed an arbitration agreement with their employer and if they did, whether it is enforceable. Employment arbitration agreements provide that if a dispute arises between the employer and the employee, the parties agree that the dispute will be submitted to an arbitrator instead of a court. There is no jury in arbitration.
Many employers include arbitration agreements in their onboarding documents, and employees often sign them electronically along with a number of other papers. Absent procedural and substantive unconscionability, and certain cases of waiver, the answer as to whether arbitration agreements in California are enforceable has usually been yes. There is an important statutory exception, however.
The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“the Act”), signed into law by President Biden on March 3, 2022, amends the Federal Arbitration Act (“FAA”) and will have a significant impact on sexual harassment cases in California. This legislation addresses the issue of mandatory arbitration clauses in employment contracts that require individuals to resolve disputes privately, rather than through the court system.
The Act applies to “any dispute or claim that arises on or after the date of enactment” of the Act. The statute provides that “no predispute arbitration agreement … shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.” The court, rather than the arbitrator, will determine the validity and enforceability of an arbitration agreement to which the Act applies.
Here’s how this act will affect sexual harassment cases in California:
- Increased Access to the Court System: The act prohibits mandatory arbitration for sexual harassment and assault claims, allowing victims to pursue their cases in court. This increases access to the court system and empowers survivors to seek justice through the traditional legal process.
- Transparency and Public Accountability: By eliminating forced arbitration, the act removes the veil of secrecy that often surrounds sexual harassment cases. Court proceedings are generally open to the public, ensuring greater transparency and accountability for both the accused and the employer.
- Potential for Larger Settlements and Damages: In arbitration, the decision-making power lies with the arbitrator, whose rulings may favor the employer. By allowing sexual harassment cases to proceed in court, victims may have a better chance of receiving larger settlements and damages if their claims are successful.
- Deterrent Effect on Employers: The act serves as a deterrent to employers, as it eliminates the possibility of confidential arbitration proceedings that shield them from public scrutiny. This increased risk of exposure may incentivize employers to take sexual harassment prevention more seriously and implement stronger policies and procedures.
- Legal Precedents and Case Law: When sexual harassment cases are resolved in court, they contribute to the development of legal precedents and case law. These rulings can shape future interpretations of the law, establish standards for acceptable behavior in the workplace, and provide guidance to employers and employees alike.
By curbing the use of forced arbitration, the Act seeks to provide survivors of sexual harassment and assault with a fairer and more transparent avenue for seeking justice in California.
Exactly how the courts will apply the Act remains to be seen. If you believe you have been sexually harassed at your work place, please reach out to our knowledgeable and compassionate lawyers at Jay S. Rothman and Associates for a free consultation.