January 23, 2018

How Forced Arbitration Agreements Have Enabled Workplace Sexual Misconduct for Decades


There are nearly 75 million women in the workforce, according to the U.S. Department of Labor. An astounding 40 percent of them have experienced unwanted sexual attention or outright coercion at work, according to a study from the U.S. Equal Employment Opportunity Commission (EEOC). That same study also found roughly 75 percent of workplace sexual harassment goes unreported.

With reports of sexual harassment and assault allegations shaking the tech industry, Hollywood, and the political realm, businesses now have little choice but to take a good, hard look at how they handle sexual assault and harassment internally. Microsoft, for example, announced it would eliminate forced arbitration agreements where they remain in existing agreements, and it has also offered support for federal legislation put forth by Senators Kirsten Gillibrand (D-N.Y.) and Lindsey Graham (R-S.C.) that would nullify such agreements in cases of sexual harassment and assault.

Many people may not be aware, but large companies often have contract agreements in place that limit the options workers have to obtain justice when wronged in the workplace, whether that means being assaulted, harassed, or injured. It is possible that you, too, are bound by such an agreement and don’t even know it.

“Arbitrations are a form of alternative dispute resolution outside of the court system,” explains Carney Shegerian, founder of California-based employment rights law firm Shegerian & Associates. “They are forced upon employees when employers unilaterally have their employees sign agreements waiving their right to a jury trial in favor of such a form of resolution. This arrangement heavily favors employers for several reasons, including forcing disputes outside of the eyes of the public, limiting the amount of discovery that can be obtained where an employee is already at a disadvantage from the start, and resulting in overall lower damages for the harm that the employees suffer. While employers will often claim that this method is a faster and more efficient manner of litigating, that hardly turns out to be reality.”

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As firms such as The Weinstein Company or Uber can attest, putting allegations before the public can have a profound impact on the way cases are treated. Victims bound by forced arbitration agreements don’t get the benefit of brand damage or public outrage to help in their cases.

“Because the agreements place disputes, such as sexual harassment complaints, away from the public eye, there is no external pressure to correct an employer’s actions and inactions as to the prevalent issue of sexual harassment,” Shegerian says. “It is why some companies, such as Microsoft, have actually been brave enough to take a stance that their arbitration agreements should not cover matters of sexual harassment. However, this still ignores that other forms of harassment, discrimination, retaliation, and overall illegal conduct can still be swept under the rug so long as these agreements are allowed to persist.”

Executives, HR professionals, and corporate policymakers have an opportunity to follow Microsoft’s lead and finally do the right thing by victims of workplace sexual misconduct in all its forms. Business leaders now have a choice before them: Give victims their day in court as is their right, or continue to turn a blind eye to workplace sexual violence through the systematic suppression of incidents. With the issue firmly in the limelight as the #MeToo movement refuses to back down, companies that choose not to act may suffer unwanted media attention and serious brand damage.

“Companies should abolish arbitration agreements completely, or in the alternative, at least make such agreements voluntary as opposed to mandatory,” Shegerian says. “Almost all companies require employees to sign these agreements on a take-it-or-leave-it basis. Employees, who are not in the same position as their employers or potential employers, are as a result forced to sign off on these agreements whether they like it or not. Otherwise, they lose their jobs. Right from the start, employers flex their power against disadvantaged employees. This model needs to change.”

How About We Just Keep This Quiet, Okay?

Employees who experience or witness sexual misconduct at work shouldn’t let bad policy or contractual agreements keep them from reporting incidents. Even if a company fails to act or doesn’t take the incident as seriously as it should, the paper trail will be crucial at some point as the accusations pile up against the accused.

And of course, if the company won’t act, there are other avenues.

“Employees should immediately report the incident to their supervisor, human resources, or whomever at the company is responsible for addressing such issues,” Shegerian says. “Employees should also consider seeking legal representation, especially when their employer fails to act. Employees need to arm themselves with the ability to fight back against this conduct because employers certainly are in a better position to sweep the conduct under the rug.”

Millennials are now the largest generation in the workforce, and they have not been shy about demanding transparency in the workplace on everything from salary and corporate investments to supply chain responsibility and the treatment of workers. The days of keeping sexual assault or harassment allegations quiet to protect managers and executives are fading away fast, and savvy companies need to be in front of this trend rather than scrambling to keep up. Ensuring that victims in your workplace have a voice speaks volumes about your corporate culture – as does denying that voice. This is one of those rare opportunities where a company has a chance to be on the right side of history. Don’t waste it.

This article is for information purposes only and does not constitute legal advice.

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Jason McDowell holds a BS in English from the University of Wisconsin-Superior and an MFA in Creative Writing from The New School. By day, he works as a mild-mannered freelance writer and business journalist. By night, he spends time with his wife and dogs, writes novels and short stories, and tries in vain to catch up on all of those superhero television shows.