Love and employment law can be a toxic mix, just watch The Office (. . . or Grey’s Anatomy . . . or The Mindy Project . . . basically TV in general). If anyone recently sent a colleague roses and chocolates for Valentine’s Day, don’t be surprised if you get a response that says: “Thanks but . . . I’m suing you!”
Yes, we’re being dramatic. But search “Valentine’s Day Employment Cases” and you’ll find all kinds of employees and employers who got burned for similar behavior. Is office romance dead or just a lot trickier? Probably a good time to schedule sexual harassment prevention training. It’s also time to update any mandatory arbitration provisions you have in employment contracts. We’ll explain . . .
“L” is for the Way the Law is Cracking Down on Mandatory Arbitration Clauses
In light of recent developments, businesses should start giving some side-eye to the arbitration provisions in their employment agreements. Earlier this week, the Senate passed a bill that will amend the Federal Arbitration Act (FAA), which generally was enacted to promote the enforcement of arbitration agreements. The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFASASHA . . . good law, terrible acronym) will prohibit mandatory arbitration of workplace sexual harassment and assault claims. While the parties can still agree to pursue arbitration, the choice to do so is now up to the employee, not the employer. Arbitration has typically been favored by employers due to its private nature. President Biden has not yet signed the bill into law, but plans to do so.
New Jersey courts also issued an FAA-related opinion earlier this week, holding that parties can waive their rights under the New Jersey Law Against Discrimination (LAD) to file a lawsuit (in favor of going to arbitration). Let’s break it down: the LAD had a provision that barred arbitration clauses in employment agreements. This provision was challenged as violating the FAA, with the court agreeing with the challenge, so now employers can keep arbitration clauses in employment agreements.
Are you still finding yourself going “huh? what?” We get it . . . let’s put it all together:
(1) There was this provision in the LAD that was widely viewed as barring mandatory arbitration clauses in employment agreements. This provision was challenged and the court held that the provision violated the FAA. So, under the LAD, you can now have arbitration clauses in employment agreements.
(2) HOWEVER, Congress just amended the FAA, prohibiting mandatory arbitration clauses for sexual assault or sexual harassment cases.
(3) So – NJ employers – it’s still cool to have a mandatory arbitration clause in your employment agreements, but you need to carve out claims for sexual assault and sexual harassment.
And there you have it!
As always, if you’ve got questions, we’ve got answers.