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.
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.