Arbitration clauses are increasingly popular among employers and employees often sign them as a matter of course when they hired. Unfortunately, that can lead to complications down the line if you end up a victim of sexual harassment–your ability to file a civil lawsuit can be circumvented and even denied if the clause ends up being enforceable. Before you file a sexual harassment lawsuit, this is what you should consider.
Have you examined your employment agreement?
Contractual arbitration agreements require employees to take their dispute before an unbiased third party who acts as a judge in the situation, rather than sue in civil court or take the complaint to the Equal Employment Opportunity Commission (EEOC).
Usually, the agreement requires both employer and employee to accept the arbitrator's decision as binding. These are attractive clauses for employers for an obvious reason: it keeps employees from taking a potentially expensive claim to civil court. In addition, arbitration clauses can allow employers to keep allegations of sexual harassment out of the public eye, essentially keeping investors, customers, and other employees in the dark about such problems. For example, a major clothing retail company used arbitration clauses to keep sexual harassment problems in its upper echelon quiet for over a decade.
If you're considering a sexual harassment lawsuit, it's important to take any agreements that you signed either at the beginning of your employment (or even at any later time) to your sexual harrassment attorney so that he or she can review it to see if there's any arbitration clause that applies to the situation. He or she can also determine if the clause is actually enforceable.
Why might an arbitration clause be voidable?
A contract is generally unenforceable if it is particularly one-sided or overly broad and restrictive. For example, there is currently a lawsuit being pressed by the EEOC against a restaurant franchise over what may be an overly broad arbitration clause that prevents employees from communicating their complaints to the EEOC about sexual harassment on the job. The EEOC says that such policies are unlawful because it prevents the government from exercising any oversight.
There are other things that may also make a court conclude that an arbitration policy is unconscionable:
- The agreement was signed without compensation. For example, if the arbitration agreement was part of the initial employment contract, the compensation comes in the form of the job. However, if the arbitration agreement was signed later on, due to a change in company policy, there had to be some form of additional compensation given to the employee in exchange for his or her signature.
- The agreement was signed under duress. For example, the employee was intimidated into accepting the agreement, even if compensation was offered.
- The agreement was hidden. If the arbitration clause is hidden in the "fine print" of the employee contract and not clearly communicated to the employee, that could be considered unfair.
- There are unreasonably severe consequences to the employee for challenging the clause. For example, the clothing retailer previously mentioned tried to enforce a $1 million penalty for "disparagement" on employees who made a complaint of sexual harassment and lost the arbitration agreement.
In addition, arbitration clauses have to abide by the laws of the state in which they are formed. Never assume that you are bound to an arbitration clause in a case of sexual harassment without first discussing the situation with an attorney.