Arbitration Remains an Option in Sexual-Harassment Cases

​Arbitration instead of litigation remains an option for employees who allege sexual harassment, despite a recent law banning the enforcement of pre-dispute pacts for sexual-harassment and sexual-assault claims.

While an employer can note that this is an option, it should do so carefully.

In describing the potential benefits of arbitration, employers should make sure not to mislead employees about it, said Kevin White, an attorney with Hunton Andrews Kurth in Washington, D.C.

Employee's Choice

"An employer can inform complainants of arbitration as an option, but they can't encourage it," said Jessica Mason, an attorney with Foley & Lardner in Houston.

Usually with sexual-harassment cases, the complainant must go through an administrative process, so employers often have advance notice that a claim might be filed before arbitration or in court. "Because of the nature of this process, an employer often has a dialogue with the plaintiff, the complainant or the complainant's counsel before suit is filed," she said.

At this point, the employer may send the arbitration agreement to the complainant directly or to the complainant's lawyer and say, "This is our arbitration provision. This can apply to your sexual-harassment dispute. If you would prefer to proceed in a private forum, this is how you do it," Mason said.

Then if the employee asks, "Do I have to?" the employer should say, "No, it is your choice. This is a choice available to you because I don't know how you feel about proceeding in public or private," she said.

"That's the way to have this conversation effectively: by advising the employee that they have this option and presenting it as an opportunity to them," Mason said. "The employer is then saying, 'This option may meet your needs' versus 'Here's an option that I'd really like because I don't want you to sue me in court.' "

She emphasized, "The conversation should be 'If you would prefer to proceed privately in arbitration, that option is available to you and it's a way we can deal with this privately without all of this becoming a matter of public record.' The most important thing for an employer to say is, 'It's your choice.' "

Personal Issue

"Because sexual harassment is based on interpersonal conduct, it's a deeply personal issue," Mason said.

She noted that sexual harassment can include assault as well as quid-pro-quo advances, consensual relations that have soured, and "persistent compliments or conversation that can make someone uncomfortable."

While a lawsuit is public, arbitration is private, which is why many employees prefer to handle harassment claims in arbitration.

Harassment "can be a sensitive, stressful or embarrassing thing to talk about," Mason noted. "A complainant may not want the relationship or behaviors to be broadcast in public [or] associated with their name."

A current employee may be concerned that if he or she chooses litigation over arbitration, there might be unlawful retaliation, noted Helene Wasserman, an attorney with Littler in Los Angeles. If so, employees can tack a retaliation claim on to their other charges, because most employment laws have an anti-retaliation provision.

On the other hand, an employee may want to make the harassment public through litigation. The worker "may feel like making it public is in itself a consequence to the alleged harasser or to the company that didn't adequately prevent the harassment from happening," Mason said. "The individual could feel they're protecting other people by bringing this into the light."

An employer might be more likely to be concerned about its public image with litigation than with arbitration. Therefore, an employer might take proactive measures in its workplace culture to avoid possible negative publicity, said Amory McAndrew, an attorney with Hoguet Newman Regal & Kenney in New York City. "This heightened accountability is sometimes seen as a benefit of a more public forum," she said.

In addition, a jury may be likelier to award a higher verdict than an arbitrator, depending on the facts, Wasserman said.

"Sexual harassment more so than any other employment dispute is intensely personal—each individual will feel differently about whether or not they want this to be private," Mason said.

Employers Favor Arbitration

As for employers, in most cases, they would rather handle sexual-harassment claims quietly and privately through arbitration, Mason said.

"After all, these are inherently unsavory allegations," she noted. "A company would typically prefer to address it in-house than have something land on the front page of a newspaper or end up on the evening news."

Mason observed that, once a lawsuit is filed and made public, the employer loses control over the narrative, regardless of whether there's an actual bad actor within the company or the organization believes the accusations are without merit.

"Emotional claims with difficult subject matter create concerns of embarrassment, morale issues among employees and other business disruptions, even where a defendant or organization is later vindicated," said Robert Sheridan, an attorney with Nelson Mullins in Boston. "In the current environment, the reputational risk of fighting even a frivolous claim in court may be too much for an employer to bear."

Moreover, arbitration often is quicker than litigation, noted Samia Kirmani, an attorney with Jackson Lewis in Boston.

In a typical arbitration involving a single plaintiff, it is not uncommon for a case to go to a final hearing within six months of filing, said Matt Gomes, an attorney with Weinberg Wheeler Hudgins Gunn & Dial in Atlanta. "There usually is no appeal because there are very few grounds for challenging an arbitration award," he said. "By contrast, the average lawsuit lasts anywhere from two to three years before trial. Both sides have the right to at least one appeal, which can tack on another 12 to 18 months before final resolution."

Law's Limitations

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, signed into law on March 3, applies only to sexual harassment and sexual assault, not discrimination based on any other category or discrimination based on sex, noted Chris Nickels, an attorney with Quarles & Brady in Milwaukee.

The law also does not apply to harassment claims based on other protected categories, such as race or disability, he added. That said, some employers might voluntarily provide that other forms of harassment are not subject to mandatory arbitration, Nickels stated.