How the World Will Change If the ‘Ending Forced Arbitration of Sexual Harassment Act’ Becomes Law

On Tuesday, tech giant Microsoft threw its support behind the bipartisan Ending Forced Arbitration of Sexual Harassment Act (“EFASHA”), which was introduced in both the House and Senate earlier this month.  If EFASHA is enacted, it will not just be a game-changer – it will be a world-changer for companies using employee arbitration agreements.

EFASHA Would Void “All Claims” Employee Arbitration Agreements

Most employee arbitration agreements are universal – that is, they cover all claims and disputes between the employer and employee, and require redress of those claims in binding (and confidential) arbitration.  EFASHA would nullify these agreements, because:

“no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of a sex discrimination dispute”

EFASHA broadly defines “sex discrimination dispute” as not only covering sexual harassment, but any sex discrimination, retaliation, hostile work environment, or any other dispute “arising out of conduct that would form the basis of a claim based on sex under title VII…”

Further, a “sex discrimination dispute” would exist “regardless of whether a violation of such title VII is alleged” – this means employee arbitration agreements requiring arbitration of state law claims (which could have been brought in federal court under a title VII sex discrimination theory) also render those arbitration agreements unenforceable.

If EFASHA is enacted into law, most employee arbitration agreements would have to be rewritten to be enforceable.

EFASHA is Bipartisan, Making it More Likely to Pass

Passage of EFASHA is by no means a “done deal” – after all, it has just been introduced.  But the strange bedfellows sponsoring the bills indicate early bipartisan support exists:

Senate Bill (S. 2203):

• Kirsten Gillibrand (D-N.Y.)
• Dick Durbin (D-Ill.)
• Dianne Feinstein (D-Calif.)
• Kamala Harris (D-Calif.)
• Heidi Heitkamp (D-N.D.)
• Lindsay Graham (R-S.C.)
• Lisa Murkowski (R-Alaska)

House Bill (H.R. 4570):

• Cheri Bustos (D-Ill.)
• Pramila Jayapal (D-Wash.)
• Walter Jones (R-N.C.)
• Elise Stefanik (R-N.Y.)

However, the proposed bills have not yet won – and may not win – the support of industry groups like the U.S. Chamber of Commerce.  The Chamber came out strongly against ending forced arbitration of consumer financial agreements in the waning days of the Obama administration.  This, of course, is a decidedly different animal.

A Gateway to Banning Arbitration of Other Discrimination Claims?

There is no doubt that EFASHA is a legislative extension of the #MeToo movement, and both seek to publicize and deter sexual misconduct in the workplace.  But where does this leave the other Title VII claims that aren’t related to sex and aren’t getting 24/7 news coverage?

Certainly the drafters of the Civil Rights Act did not intend for two classes of discrimination claims – one for sex, and another for everything else.  And what about disability discrimination?

At this time, there is no legal requirement to rewrite your employee arbitration agreements to account for EFASHA, and it’s anyone’s guess whether EFASHA (if passed) will spawn companion legislation for other types of discrimination.  But HR departments need to monitor these bills as they progress through Congress.

Demetri Economou is an associate in KRCL’s Labor & Employment Practice Group, based in Houston.  Should you have any questions about this or other legal issue, please contact Demetri at deconomou@krcl.com.