Court Rules Employer Can’t Compel Arbitration in Sexual Harassment Case

Leah Shepherd By Leah Shepherd September 7, 2023

​A former employee for Rivian Auto can take her sexual harassment and hostile work environment claims to court, and the company's arbitration agreement cannot apply because the case involved allegations of sexual harassment that took place after Congress passed a new federal law banning forced arbitration of sexual assault and sexual harassment claims, a federal court recently ruled.

On Aug. 21, the U.S. District Court for the Central District of Illinois rejected the employer's request to send the case to arbitration. The court declined to rule on whether the case should be certified as a class action.

This case is one of the first to test the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA). The timing of when the alleged misconduct occurred was important in this case.

"There will continue to be skirmishes in cases where the acts of harassment predated the EFAA," said Gregory Germain, a law professor at Syracuse University College of Law in Syracuse, N.Y. "I suspect that future courts will not accept the Rivian court's argument that acts of harassment that took place entirely before the EFAA will not be covered."


The plaintiff, who worked on batteries for the electric car manufacturer in Normal, Ill., said starting at the end of 2021, several male co-workers made unwanted sexual advances, pinched her sides, breathed down her neck, and showed her sexual pictures and videos on their phones. The plaintiff began taking intermittent medical leave in February 2022. Later, she said one engineer groped her at work on April 13, 2022.

She reported the groping incident and was moved to another workstation, but the engineer continued to unnecessarily appear at her workstation and make incessant eye contact with her, according to court documents. The plaintiff did not return to work after April 20, 2022, and she was fired on June 1, 2022. The next day, she filed charges of sexual harassment and hostile work environment with the Illinois Department of Human Rights and the U.S. Equal Employment Opportunity Commission.

She claimed she reported the harassment to several supervisors but the company failed to remedy the problem. The company declined to comment on pending litigation.

The plaintiff had signed an arbitration agreement, but the agreement specifically excluded claims for discrimination or harassment based on gender.

Many employers require employees to sign arbitration agreements as a condition of employment. Under the EFAA, these mandatory arbitration agreements cannot apply to sexual harassment and sexual assault claims that occurred after the law's effective date of March 3, 2022. However, an employer can present the employee with the voluntary option of going to arbitration, rather than court.

Rivian argued that the EFAA should not apply and the case should go to arbitration, because the alleged incidents started in December 2021 and "fully accrued" in February 2022, when the plaintiff started taking medical leave. "Fully accrued" here means the cause of legal action is complete. The plaintiff argued that the EFAA should apply to all her claims because at least one alleged harassing incident took place after the law took effect.

The court agreed with the plaintiff, citing precedent that holds a hostile work environment claim is not complete until the date of the last act that made up the hostile work environment claim.

"A hostile work environment claim represents a continuing violation which does not occur on a particular day and has not accrued as of the date of the first offense," the court noted.

"Clearly, the dispute arose after the EFAA, so the focus only on accrual of the claim might limit some other case where all of the conduct occurred before the enactment, but the dispute occurred after enactment. That might be an issue for a future case," Germain said.

Arbitration vs. Litigation

For employers, arbitration tends to be faster and less expensive than court trials. Unlike public court cases, arbitration is private.

"An employee who's suffered harassment has all the same rights and claims in arbitration as in court litigation," said Christopher Murray, an attorney with Ogletree Deakins in Indianapolis. "An employer found liable for harassment will be on the hook for all the same damages in arbitration or in court."

Federal law prohibits sexual harassment in the workplace, including unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature. It must be frequent and severe to constitute a hostile work environment claim. An employer is liable for the sexual harassment if it knew, or should have known, about the misconduct and failed to take immediate corrective action.

"Regardless whether harassment claims would be in arbitration or court, employers should adopt and enforce anti-harassment policies, provide appropriate training, and take other reasonable steps to prevent and correct any harassing conduct in the workplace," Murray said.



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