Facebook Joins the Ranks of Employers Ending Forced Arbitration for Sexual Harassment Claims

November 21, 2018 | By

In the wake of the #Metoo movement, and as a result of growing pressure on state legislators and industry leaders, Facebook has become the most recent tech giant to stop requiring its employees to agree to submit to arbitration for sexual harassment claims.

Facebook’s decision to end forced arbitration follows similar policy changes at Google and Microsoft.  Google made the decision to end forced arbitration for sexual harassment claims following a November 1, 2018, walkout by its employees (dubbed the #GoogleWalkout on social media) in response to the company’s handling of sexual harassment complaints and exit packages paid to executives accused of misconduct.  Uber also ended its policy requiring arbitration earlier this year, after details about sexual assault allegations against its drivers became public.

These changes are in line with a growing trend across the country.  In the past year, several states have adopted laws banning mandatory arbitration for sexual harassment or other types of employment-related claims.  Most recently, New York State, home to about 1,000 Facebook employees and about 5,000 Google employees, made “any clause or provision in any contract which requires . . . the parties submit to mandatory arbitration to resolve any allegations or claims of . . . sexual harassment” “[n]ull and void.”[1]

Three other states, Washington, Maryland and Vermont, have enacted similar laws.  Washington state passed a bill that prohibits mandatory arbitration with respect to all types of employment discrimination.[2]  The Maryland legislature invalidated any “provision of 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.”[3]  In Vermont, the legislature passed a law prohibiting employer from requiring any employee, as a condition of employment, to waive “a sustentative or procedural right or remedy available to the employee with respects to a claim of sexual harassment.”[4]   In addition, in New Jersey, the 2018 pay equity law made it an “unlawful employment practice” to require New Jersey employees to waive any protections provided under that state’s Law Against Discrimination.  While the new law did not mention arbitration specifically, the new language could be interpreted to limit the scope of arbitration provisions because New Jersey law provides for trial by jury for discrimination and harassment claims.

Despite this growing trend among state legislatures, the enforceability of these laws remains unclear.  The Supreme Court has ruled that state and local laws cannot interfere with enforcement of the Federal Arbitration Act, which has been generally interpreted to broadly favor arbitration, and which does not include any language treating sexual harassment claims any differently.  Due to this concern over enforceability, California’s Democratic Governor, Jerry Brown, vetoed a recent bill that would have prohibited employers from requiring workers to waive their right to sue in court for sexual harassment (but allowed employees to voluntarily agree to arbitration).  This follows the Supreme Court’s May 2018 ruling in Epic Systems Corp. v. Lewis, upholding mandatory waivers of class action claims in arbitration (covered by HR Legalist here).

Despite the lingering concerns of enforceability, legislatures and employers show no sign of changing course in the face of the #Metoo movement.  As these tech giants voluntarily eliminate mandatory arbitration agreements, it is expected that other employers will follow suit.  This is especially true given the public relations fallout for failing to do so, as well as increasing competition to attract skilled employees in a tightening job market.

[1] N.Y.C.P.L.R. 7515(a)(2), 7515(a)(4)(b)(i)-(iii).

[2] S.B. 5996, 65th Leg., 2018 Reg. Sess. (Wash. 2018).

[3] 2018 Maryland Laws Ch. 739 (S.B. 1010).

[4] Bill H. 707.

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