Federal EFAA Returns Claims to Court Where they Belong

Arbitration clauses in employment contracts are controversial because of a lack of transparency, the limited opportunity for discovery, the lack of juries, and the risk of bias and unequal treatment of employees and employers. However, the government has taken steps to cure this unfairness in arbitrating some employment claims, particularly gender discrimination claims.

Arbitration is a private process, usually created by a contract, and the proceedings are not typically open to the public. Such a lack of transparency can raise concerns about accountability and fairness, as the outcomes are not publicly accessible, and there is limited ability to review or appeal the arbitrator's decision. Another detriment of arbitration of employment matters is that unlike court proceedings, arbitrations have more limited discovery processes. This can mean that some evidence and information relevant to the case may not be fully examined, potentially leading to decisions based on incomplete information. Arbitration clauses also require the employee to waive their right to a jury trial. The right to a jury trial is a fundamental aspect of the legal system, and arbitration clauses can effectively strip individuals of this right. This is particularly troubling because the arbitration process is often biased in favor of the company because the arbitrator or arbitration company has an incentive to be hired again for future cases by the same company. This could lead to concerns about conflicts of interest and a lack of impartiality. These controversial aspects of employment arbitration become all the more harrowing when the underlying employment claim at issue is sexual assault and sexual harassment, claims which are traumatic in even the best of circumstances.

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), 9 USC §§ 401-02, seeks to prohibit employers from hiding such gender discrimination claims behind the wall of private arbitration. The act renders arbitration clauses in employment contracts unenforceable when employees bring claims of sexual assault and harassment in the workplace. By restoring employees’ access to the Courts to bring such claims which accrued on or after March 3, 2022, the day it was signed into law, the act protects the employees’ rights and provides them with a more fair and transparent process for addressing workplace harassment claims.