Have a look at your employment agreement. Chances are, situated amongst the lengthy expanse that outlines the terms of your employment is a little provision that states that “any disputes of any nature between you and [your employer] will be submitted to binding arbitration.” Unless you work for a company that has publicly sworn off the use of such arbitration agreements in specific cases – whether it be Facebook and Google or Uber and Lyst, those at-times-controversial conditions of employment are valid and enforceable across the board, regardless of the type of dispute at play. A newly-passed bill wants to change that.
Last month, the New York State Senate gave the formal go-ahead to Senate Bill S6577, legislation that aims to expand harassment and discrimination laws, and once signed by Governor Andrew Cuomo, one that will have sweeping implications for employers in New York state.
In addition to eliminating certain defenses for employers, such as the Faragher-Ellerth defense, which gives employers the opportunity to remedy claims of discrimination or harassment by requiring employees to follow internal complaint procedures, and expanding the remedies available for parties that have been subjected to discrimination and/or harassment claims to include punitive damages and attorney fees, one of the most striking elements of the bill is its treatment of mandatory arbitration provisions.
The frequency with which mandatory arbitration language is used in employment agreements means that the vast majority of employment-related cases are not handled in court but by way of arbitration proceedings that are private, meaning that third parties cannot attend conferences or hearings, and in many cases, the proceedings – and the outcomes – are completely confidential, thereby obscuring information from the public and even from the aggrieved employee’s co-workers.
For most business-related matters, arbitration is generally understood to make sense from a resource perspective (it is often less expansive and more expeditious than a jury trial), but forcing employees to resolve sexual harassment and/or discrimination cases by way of private arbitration as a condition of employment has proven a major point of contention, particularly in the #MeToo era. Enter: Senate Bill S6577.
Unanimously passed by the New York State Senate last month, the Senator Alessandra Biaggi-sponsored bill prohibits clauses in contracts “entered into on or after January 1, 2020” that require parties to submit to mandatory arbitration for all discrimination and harassment claims. Expected to take effect on August 19, 2019 (for the majority of the provisions, at least), to the extent that it can in light of the existence of the Federal Arbitration Act, the New York State bill also prohibits provisions that provide that any facts or determinations made by an arbitrator or arbitration panel are final and “not subject to court review.”
Still yet, the bill – quite significantly – “prohibits non-disclosure agreements from prohibiting the disclosure of the underlying facts and circumstances to the claim or action unless the condition of confidentiality is in the plaintiff’s preference in all discrimination cases.”
The newly-passed legislation – which will join the New York Civil Practice Law and Rules section 7515, a state law barring contractual provisions mandating arbitration for any allegations or claims of sexual harassment, except where inconsistent with federal law – is expected to change the legal landscape governing discrimination and harassment in the workplace, especially since the use of arbitration agreements, for instance, is so pervasive.
Currently underway in New York state court, after all, is the case that LVMH’s Litigation Counsel and Vice President of Legal Affairs Andowah Newton filed against the luxury goods conglomerate, alleging that she has been exposed to “sexual harassment at the hands of a senior level management employee … that continued for years” and the parent company for Louis Vuitton, Dior, Celine, and Givenchy, among 70+ other brands, did very little to remedy it.
While Newton filed suit in a New York state court, LVMH has since pointed to an arbitration clause in the employment contract that she signed in 2014, which states that “any disputes of any nature between you and [LVMH or “any of its subsidiaries, affiliates, or related entities, or any of their officers, directors, employees or agents”] will be submitted to binding arbitration.” The arbitration agreement further requires that “all information regarding the dispute, claim or arbitration proceedings, including any settlement or arbitration award, will not be disclosed by Employee [or LVMH] … to any third party without the written consent of Company and Employee.”
Share
