As a result of the #MeToo movement and the significant effort to give voice to victims of sexual harassment who have long suffered without public recourse, the New York State (NYS) legislature amended the NYS Human Rights Law earlier this year to strengthen protections for employees who allege claims of sexual harassment and attendant discrimination. The amendment aims to prohibit employers from forcing victims to proceed with their claims only through arbitration, which is often shrouded in secrecy. This legislation (which is similar to statutes recently enacted in other states, as well) is seemingly a giant step forward for employees who wish to speak publicly through litigation. Nevertheless, while the new NYS law invalidates mandatory arbitration provisions in employment agreements that include discrimination claims and also provides that non-disclosure agreements in discrimination settlements are invalid unless they are requested by the employee, it is not without controversy.
It is almost certain that these laws will be challenged as pre-empted by federal laws, including in large part, the Federal Arbitration Act (FAA). The FAA heavily favors a party’s right to contract for arbitration. Given the current make-up of the Supreme Court, and the recent spate of cases holding the FAA as sacrosanct, those challenges are likely to be successful. Of course, Congress could act to amend the FAA to exclude matters of sexual harassment from its reach, but that hardly seems plausible in today’s political climate. All of this spells good news for employers and terrible news for employees. While we are huge proponents of alternative dispute resolution (ADR) as a means to resolve disputes more quickly and cheaply than going the traditional litigation route, the use of what effectively constitutes forced arbitration undercuts the entire spirit and policy underlying ADR.
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