New York Prohibits Mandatory Arbitration of Sexual Harassment Claims

On Behalf of | July 20, 2018 | Gender Discrimination, Harassment, Sexual Harassment

The #MeToo movement has shined an unflattering light on employer-mandated arbitration agreements, which commonly prevent victims of sexual harassment from speaking publicly about their experiences. Mandatory and confidential arbitration has the effect of forcing women into silence, while allowing perpetrators to continue to harass and assault other employees.  With the rise of the #MeToo movement, states have begun to enact laws that prohibit mandatory arbitration of sexual harassment cases.

In April, New York Governor Andrew Cuomo signed into law an Executive Budget with several provisions targeting workplace sexual harassment, including a new ban on mandatory arbitration of sexual harassment claims. This prohibition applies to contracts entered into on or after July 11, 2018 and also declares “null and void” “any cause or provision in any contract which requires . . . the parties submit to mandatory arbitration to resolve any allegation or claim of . . . sexual harassment.” N.Y.C.P.L.R. 7515(a)(2), 7515(a)(4)(b)(i)-(iii) (emphasis added). The new law does not apply to collective bargaining agreements or affect the arbitrability of claims unrelated to sexual harassment, such as pay discrimination lawsuits. Nevertheless, it is a step in the right direction.

And it is part of a nationwide trend. This past March, Washington enacted a law that severely restricts mandatory arbitration with respect to all forms of employment discrimination. Specifically, the law prohibits an employment contract from “requir[ing] an employee to waive the employee’s right to publicly pursue a cause of action . . . or [from] requir[ing] an employee to resolve claims of discrimination in a dispute resolution process that is confidential.” S.B. 5996, 65th Leg., 2018 Reg. Sess. (Wash 2018). A new law in Maryland—The Disclosing Sexual Harassment in the Workplace Act of 2018—precludes mandatory arbitration of sexual harassment claims by invalidating any “provision in an employment contract, policy, or agreement that waives any substantive or procedural right or remedy to a claim that accrues in the future of sexual harassment or retaliation for reporting or asserting a right or remedy based on sexual harassment.” 2018 Maryland Laws Ch. 739 (S.B. 1010). Other states, from South Carolina to California, are considering similar legislation and may soon follow suit.

One question that looms over such state laws is whether they are preempted, and thus nullified, by the Federal Arbitration Act (FAA). In a nod to this possibility, the New York statute states that it applies “except where inconsistent with federal law.” N.Y.C.P.L.R. 7515(a)(4)(b)(i). In recent years, the Supreme Court has treated the FAA as sacrosanct and interpreted it to mean that courts must “rigorously [] enforce arbitration agreements according to their terms, including terms that specify with whom the parties choose to arbitrate their disputes and the rules under which that arbitration will be conducted.” Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1621 (2018).

Congress could resolve this problem by amending the FAA to outlaw mandatory arbitration of workplace sexual harassment claims. [1] If Congress fails to act, then, over the next couple of years, courts will determine the validity of state laws that prohibit mandatory arbitration of sexual harassment claims.

In the meantime, employees in New York, Washington, Maryland and states that follow their lead cannot be forced to sign away their right to bring sexual harassment claims in the courts. Moreover, employees in these states may have some basis for voiding past agreements to arbitrate sexual harassment claims.

[1] In February 2018, every single state attorney general signed onto a letter in support of such legislation to “help to put a stop to the culture of silence that protects perpetrators at the cost of their victims.” The letter is available at:$file/NAAG+letter+to+Congress+Sexual+Harassment+Mandatory+Arbitration.pdf.