Savvy Michigan employers have adopted broad “mandatory arbitration” provisions in employment contracts, policies, and handbooks. The primary purpose of those policies is to keep employment discharge and related claims out of court, where defense costs and jury damage awards can be significant. This development occurred in response to federal and Michigan Supreme Court decisions expanding the scope of arbitration policies by enforcing arbitrator awards rendered not only in contract (discharge) claims, but in employment discrimination and related claims as well.
Following public focus on such provisions and sharpened criticism in light of the “#MeToo” movement, Congress was spurred to intervene. In February, Congress passed, and on March 3, 2022, President Biden signed into law, the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (the “Act”).
Technically, the Act amends the Federal Arbitration Act. The effect of the Act is to assure that any person bringing a sexual assault or sexual harassment claim under any state or federal law, has the protected right to have such claim litigated in court, rather than arbitration. Under the Act, any person who had signed or otherwise agreed to be bound by an arbitration arrangement may nevertheless be excused from such agreement or contract and elect to proceed in court.
In addition, certain “pre-dispute” restrictions on waiver of the right to pursue a collective or “class action,” that had avoided judicial invalidation, may also be invalidated by a plaintiff-litigant who elects to do so.
Importantly, arbitration employment policies and pre-dispute collective action waivers remain permissible. Further, those policies remain enforceable to the extent that a party-litigant does not challenge or seek to invalidate them upon pursuing a claim. Given most plaintiffs’ and plaintiffs’ counsel’s preference for court rather than arbitration proceedings, however, it is expected that many or most claims will be pursued in court.
Fraser Trebilcock Labor and Employment Lawyers are here to help you keep your employment policies at the forefront and navigate the ever-changing landscape. If you have any questions about these issues, please contact please contact Dave Houston or your Fraser Trebilcock attorney.
This alert serves as a general summary and does not constitute legal guidance. All statements made in this article should be verified by counsel retained specifically for that purpose. Please contact us with any specific questions.
Fraser Trebilcock Shareholder Dave Houston has over 40 years of experience representing employers in planning, counseling, and litigating virtually all employment claims and disputes including labor relations (NLRB and MERC), wage and overtime, and employment discrimination, and negotiation of union contracts. He has authored numerous publications regarding employment issues. You can reach him at 517.377.0855 or firstname.lastname@example.org.