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Q. Our company has a policy providing for mandatory arbitration of employment claims. I heard recently that some companies are moving away from these types of policies. What are the pros and cons of requiring all employees to submit their employment claims to arbitration?
A. There are a number of issues to consider regarding whether a company should require its employees to submit all employment claims to arbitration. These types of policies have been in favor since the 2018 United States Supreme Court opinion in Epic Systems Corp. v. Lewis, which endorsed mandatory arbitration agreements even where they resulted in employees waiving their rights to pursue claims in a class or collective action.
In light of the #MeToo movement, however, federal and state legislatures have taken steps to ban private resolution of sexual harassment claims. For example, New York State recently passed a law prohibiting not only the use of mandatory arbitration for sexual harassment claims, but also non-disclosure agreements relating to settlement of those claims. Similar laws were passed in Washington and Tennessee in 2018, and comparable legislation has been introduced in several more states. At the federal level, Congress currently is considering a bill called the Forced Arbitration Injustice Repeal (FAIR) Act, which would ban mandatory arbitration in employment and consumer agreements.