EPL CORNER

NEW LAW ENDS MANDATORY ARBITRATION OF SEXUAL ASSAULT AND HARASSMENT CLAIMS

President Biden recently signed into law the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” 

This law amends the Federal Arbitration Act to prohibit the enforcement of mandatory arbitration clauses in employment-related contracts and other agreements to the extent such provisions are applied to sexual assault and sexual harassment claims. The stated goal of the law is to shift resolution of such claims from arbitration to court. 


The new law invalidates an employer’s reliance upon “pre-arbitration agreements,” which are defined as “any argument to arbitrate a dispute that had not yet arisen at the time of the making of the agreement.” It also invalidates pre-dispute joint action waivers, meaning “an agreement that waives the right of one of the parties to participate in joint, class, or collective action … concerning a dispute that had not yet arisen at the time of the making of the agreement.” The law applies to both existing and future arbitration agreements, but only with respect to any dispute arising or accruing on or after the law’s effective date.

 

 

EMPLOYMENT-RELATED PRACTICES EXCLUSION IN CGL POLICY DOES NOT PRECLUDE DEFENSE COSTS IN BIPA SUIT

State Auto. Mut. Ins. Co. v. Tony's Finer Foods Enters. Ins., No. 20-cv-6199 (N.D. Ill. Mar. 8, 2022)

A former employee sued an insured supermarket for violations of the Illinois Biometric Information Privacy Act (“BIPA”) in the use of fingerprints to clock in and out of work.

The supermarket tendered the suit to its commercial general liability insurer, but citing the policy’s exclusion for claims related to employment practices, the insurer denied coverage and asked the court to determine it had no obligation to defend the supermarket.

 

The court, however, declined to apply the exclusion to the claim. The policy’s employment-related practices exclusion included a long list of targeted actions against an employee, the court noted, and applied to practices “such as coercion, demotion, evaluation, defamation, harassment, humiliation, or discrimination directed at that person.” Unlike these enumerated items, the court concluded that scanning one’s finger is not a disciplinary action, does not affect one’s standing within the company, and does not relate to the mistreatment of a specific employee.

INSURERS MUST DEFEND BIPA SUIT DESPITE EMPLOYMENT-RELATED EXCLUSIONS

Citizens Ins. Co. of Am., et al. v. Thermoflex Waukegan, No. 1:20-cv-05980 (N.D. Ill. Mar. 1, 2022)

This coverage dispute arose when employees of an automotive accessory company brought suit against their employer alleging the company’s collection of employees’ handprint data, which was used for authentication and timekeeping purposes, violated the Illinois Biometric Information Privacy Act (“BIPA”). 

The company tendered the suit under its commercial lines insurance policies, which provided coverage for “personal and advertising Injuries,” but the insurers denied the claim.

According to the insurers, the policies’ employment-related exclusions barred coverage for employee conduct, and the “collection of biometric information” and “collection of handprints” could be understood as constituting such employee conduct. The court disagreed, however, concluding the policy language did not negate the insurers’ duty to defend. The court further concluded that Illinois law provides that any ambiguity in an insurance policy should be resolved against the drafter (and thus, in favor of the insured).