Sunday, January 14, 2018

The "Ending Forced Arbitration of Sexual Harassment Act" and Workers’ Compensation

The only thing preventing workers’ compensation cases from being systematically subject to mandatory arbitration is the current preference, the whim, of employers. Any state law purporting to forbid employers and employees from entering into mandatory arbitration agreements is almost certainly preempted. Mandatory arbitration of workers’ compensation cases would be terrible for injured workers. Major studies of arbitration awards demonstrate workers fare significantly worse in arbitral forums. Moreover, under the Federal Arbitration Act there is no substantive appeal from the award of a private arbitrator.

Fortunately, there is a glimmer of hope on the horizon. As was widely reported early last month, a bipartisan group of lawmakers, including Senators Gillibrand of New York and Graham of South Carolina, introduced legislation on December 6, titled the Ending Forced Arbitration of Sexual Harassment Act, to prevent employers from enforcing mandatory arbitration agreements in instances where their employees allege workplace sexual harassment or gender bias. The legislation was prompted by a tsunami of recent, well-publicized workplace sexual harassment allegations. It has become clear that many of the claims that might have been litigable in civil lawsuits could never be brought where an employee had signed an arbitration agreement. The likelihood for underdeterrence of sexually unlawful conduct seems high where, as is the case in a private arbitral forum, damages are significantly lower, employers have typically unilaterally devised the adjudicatory structure of proceedings, and arbitrators and employers are often together “repeat players” in arbitration (not to mention that arbitrators are often directly compensated by employers).

Why is the Ending Forced Arbitration Act so significant? The premises of the Act are obviously that arbitration is not adequate to vindicate the policy of compensating individuals for sexual harassment; and that the policy objectives of sexual harassment law exceed those of the more abstract (and some like me would say dubious) policy supporting compulsory arbitration of employment (or even tort) claims. Once this kind of questioning has begun—and it will begin, either here or elsewhere—it will likely be infectious. The era of blind application of the FAA to nearly all labor and employment claims – a freight Congress obviously never meant for the FAA to carry – may be underway. The only plausible legal justification for the absurd expansion of the FAA has been that Congress has remained silent in its wake. Once Congress speaks through establishment of an exception, however, it will be forced to explain, and to make currently absent analytical distinctions. Why should sexual harassment claims be exempted from the FAA and not racial harassment claims? Why should a federal arbitration statute from the 1920s trump 21st century state tort law?

And it is the federalism question in the final line of the last paragraph that gives me most hope for workers’ compensation. If there is an area of civil law that so firmly evinces the historical state police power than workers’ compensation law, I am unaware of it. It is for this very reason that the most aggressive federal employment statute, in terms of preemption—the Employee Retirement Income and Security Act of 1974 (ERISA)—explicitly carves out workers’ compensation plans from its coverage. Let us hope that Congress is finally coming to its collective senses. The answer to putatively overcrowded dockets and allegedly overzealous plaintiffs was never practical elimination of the rule of law.    

Michael C. Duff

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