The End of Forced Arbitration for Sexual Assault and Harassment
Charlene Echeverria Burciaga
Loyola University Chicago School of Law, J.D. 2023
Five years after the introduction of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act(EFASASH) by Senator Kristi Gillibrand and Senator Linsey Graham, President Biden signed it into law on March 3, 2022. Without this law, employers could prohibit their workers who have experienced sexual assault or harassment from seeking recourse in court. With EFASASH, sexual predators and their employers will no longer be able to evade public accountability. In a world where eighty-one percent of women have reported experiencing some form of sexual harassment and or assault in their lifetime, forced arbitration of sexual assault and harassment claims have only worked as a silencing mechanism.
History and Impact of Forced Arbitration Agreements
In 1925, Congress passed the Federal Arbitration Act (FAA) to encourage arbitration to resolve legal conflicts. Arbitration is a contract-based form of binding dispute resolution without using the courtroom. Arbitration clauses are often encouraged because they are considered efficient, flexible, economical, and private. According to Economic Policy Institute, more than fifty-five percent of the American workforce is subject to mandatory arbitration. Therefore, most sexual assault claims are often not discovered until the U.S. Equal Employment Opportunity Commission (EEOC) begins investigations.
In 2019, the EEOC required Uber to pay $4.4 million to employees who had been sexually harassed in the workplace. Uber later ended its policy of forced arbitration regarding sexual assault claims. However, Uber is the exception to widespread practice as, prior to EFASASH, most employers still contained a forced arbitration clause for sexual assault claims. In 2021, the EEOC received over five thousand filed charges of sexual misconduct in the workplace. More recently, on March 30, 2022, the U.S. District Court of the Central Division of California, entered a consent decree between Activision Blizzard, Inc. and the EEOC that includes $18 million in monetary relief. Evidently, sexual harassment and assault in the workplace are prevalent.
The Supreme Court has also upheld the expansion of mandatory arbitration, protecting employers from individual and class actions claims. The Supreme Court’s support for mandatory arbitration has allowed companies to use forced arbitration in situations a court would generally evaluate more fairly. According to Economic Policy Institute, mandatory arbitration win rates for employees is only 21.4 percent, while 59 percent in federal courts and 38 percent in state courts. Between 1988 and 2018, only seventeen women had won on their sexual harassment claims in front of the Financial Industry Regulatory Authority (FINRA,) Wall Street’s oversight body. According to HISCOX, sexual harassment is the most common form of workplace harassment, making up more than fifty percent of all complaints. However, even with forced arbitration, women rarely ever win their claims.
Furthermore, even when a woman such as Gretchen Carlson, a former Fox News Host, receives a settlement of $20 million, the harasser does not face any legal or professional repercussions as the information is kept confidential. Forced arbitration clauses have provided employers with the power to keep their structural problems hidden and provide limited employee rights. Ultimately, forced arbitration clauses only function to silence victims of sexual assault and harassment, and as protection to offenders.
Moving Forward with EFASASH
The goal of EFASASH is not only to provide people who experience sexual assault or harassment in the workplace more power but also to incentivize employers to have a more robust anti-harassment policy. Due to the secrecy of arbitration, offenders and their employers do not face public repercussions. However, EFASASH provides transparency. This transparency will likely increase backlash that can decrease a company’s revenue or lower profits if they refuse to address their toxic culture.
EFASASH directly combats the problems uncovered by the #MeToo and #TimesUp movements by, at a minimum, providing victims of sexual harassment the ability to seek recourse outside the workplace. Employers who rely heavily on mandatory arbitration to resolve sexual assault or harassment disputes will have to reevaluate their sexual harassment policies and work culture. With EFASASH, employers will have to provide enhanced anti-harassment policies, regularly communicate the importance of complying with such policies, and promptly address any occurrences of harassment. Failing to do so will likely force them to face severe, public legal and financial problems.