How Ending Forced Arbitration in the Workplace Is Going to Affect Employers

The purpose of the law is to allow those who have experienced sexual assault or harassment to have their day in court.

Answer by Kara Govro, Chief HR Legal Expert

Congress recently approved a bill to nullify forced arbitration in sexual assault or harassment cases. What are the implications for employers? originally appeared on Quora, the place to gain and share knowledge, empowering people to learn from others and better understand the world.

On February 10 Congress passed the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Claims Act of 2021” (EFASASHCA doesn’t really roll off the tongue, so we’ll call this “the Act”). President Biden is expected to sign it shortly. The purpose of the law is to allow those who have experienced sexual assault or harassment to have their day in court, rather than be forced into arbitration.

Employers like arbitration because its takes place behind closed doors, it’s generally less expensive than going to court, and employees can’t forum shop for the most sympathetic jurors (because there are no jurors). While plaintiffs can still win in arbitration, punitive damages (the big, big awards you hear about) are extremely rare or entirely disallowed. Additionally, settlement agreements almost always come with a confidentiality clause, so an employee who has been harassed can’t tell the media about it—or even their coworkers—thus reducing pressure on the organization to improve their culture and prevent harassment in the future.

The Act not only prevents employers from requiring arbitration of sexual harassment and sexual assault claims in the future, but also has a retroactive effect. This means employers can’t enforce a current arbitration agreement (with respect to sexual assault and harassment) even if the employee willingly agreed to it.

So, what’s an employer to do now? Well, many employers weren’t using arbitration agreements in the first place, and some who were still had good harassment prevention policies and procedures. But employers who were relying on forced arbitration to provide cover for unchecked sexual harassment—perhaps because that seemed like an easier or cheaper solution than working on their culture and their policies—will need to seriously rethink that approach. All employers (but especially those who haven’t spent much time thinking about these issues before) should focus on the following:

1. Clear, thorough, and well-distributed harassment prevention policies; they should be in plain English, include a wide variety of examples of harassment (not just quid pro quo and assault), and be redistributed and trained on regularly.
   
2. Clear, multi-channel complaint policies and procedures; the ability for employees to report harassment to more than just their manager (who might be the harasser, or who they might feel is biased), is considered the gold standard. Just make sure that anyone who has been named as a receiver of complaints has been trained on what to do once they receive one.
   
3. A well-resourced system that allows for rapid and thorough responses to complaints; employers should have a plan for how to respond to complaints and must be able to immediately prioritize an investigation when necessary.
   
4. Training employees not to harass; this is required in a handful of states but is a best practice everywhere and for employers in all industries and of all sizes.
   
5. Training managers not to harass; don’t forget that managers are employees too, but because of their position their bad actions can expose you to even more liability.
   
6. Training managers to prevent and respond to harassment amongst their employees; an employer’s perfect harassment prevention policy and brilliant complaint procedure will be worthless if managers (and HR) don’t understand what to do next after a complaint is received. Investigating complaints doesn’t have to be especially complex, but it does need to be done quickly, thoroughly, without bias, and with the right documentation.

Thoughtful attention to the practices above will not only provide an employer with stronger defenses against harassment claims in court but should significantly reduce the likelihood that harassment will happen in the first place and reduce the chances that harassment will lead to a lawsuit.