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Mandatory Arbitration Clauses Are No Longer Enforceable in Sexual Harassment Claims

Mandatory Arbitration Clauses Are No Longer Enforceable in Sexual Harassment Claims

In New Jersey as in other states, employment contracts increasingly are including clauses that mandate arbitration as the forum for settling disputes. Despite the advantage that arbitration typically gives an employer, prospective employees often are put in the position of agreeing to the terms or looking elsewhere for employment. Although mandatory arbitration clauses are generally upheld by the courts, a federal law provides that these clauses do not apply to sexual harassment or sexual assault claims.

The “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act,” enacted in 2021, came in response to a conflict between state and federal laws. Several states passed laws voiding agreements that waived certain employee rights, such as the right to sue over discriminatory actions. New Jersey’s Law Against Discrimination was amended in 2019 to add such a provision. But the Federal Arbitration Act (FAA), which declares compulsory arbitration agreements valid and enforceable, has been held to take precedence over state law. Under the 2021 federal law, the LAD’s anti-waiver provision can stand.

There is a vast difference between defending against a sexual harassment claim in an arbitration as opposed to litigating one in court. For employers, arbitration offers these advantages as compared with litigation:

  • Limited discovery process
  • Confidentiality of the forum
  • Reduced exposure to damages
  • Lower chance of bias in favor of the employee
  • Finality in the outcome
  • Reduced attorneys’ fees and costs

With this sea change in how sexual harassment claims can be adjudicated, employers will need to rethink their policies. This may include carving out exceptions to employment agreements mandating arbitration of disputes. Employers may still ask employees to consent to arbitration when a dispute arises.

Employment discrimination claims can be complicated to evaluate and prove. This is particularly true when there are allegations of sexual misconduct, which are typically based only on a claimant’s testimony. The new law provides a wider range of legal remedies for employees suffering sexual harassment or assault.

The New Jersey employment attorneys at Deutsch Atkins & Kleinfeldt have the knowledge, skills and dedication to give your sexual harassment case the special attention it deserves. Contact us online or call us at 551-245-8894 to set up an initial consultation at our Hackensack office.

Neil  H.  Deutsch Attorney Photo
Neil H. Deutsch
Retired

About Neil H. Deutsch has been practicing law for over 35 years and is known as a skilled negotiator in employment and discrimination law. He believes in a bottom-line approach of risk analysis and cost effectiveness for his clients. "Case evaluation is something we take seriously," says Mr. Deutsch who seeks top net dollar for…

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Bruce L. Atkins
Senior Partner

About Bruce L. Atkins is regarded as one of New Jersey’s premier practitioners of employment and civil litigation. He has been selected to the New Jersey Super Lawyers prestigious list every year since 2005.  This honor, bestowed upon a recipient by the votes of his peers, is a powerful nod to the skill Mr. Atkins…

Adam  J.  Kleinfeldt Attorney Photo
Adam J. Kleinfeldt
Partner

About Adam J. Kleinfeldt joined Deutsch Atkins & Kleinfeldt, P.C. in March of 2015.  He primarily represents individuals in employment litigations such as discrimination, retaliation, and whistle blowing matters.  He has extensive experience in all phases of the litigation process. Adam has obtained significant results for some of his clients, including a $525,000 jury verdict…

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Diane Englander Peyser
Attorney

About Diane Englander Peyser joined Deutsch Atkins & Kleinfeldt, P.C. in September 2018 where she represents employees in wrongful termination, retaliation, harassment, and discrimination matters. Prior to joining Deutsch Atkins & Kleinfeldt, P.C., Diane represented clients in all aspects of employment law on behalf of employees involving unemployment appeals, claims of sexual harassment, LGBT discrimination,…

Debra M. McGarvey Attorney Photo
Debra M. McGarvey
Attorney

About Debra M. McGarvey joined Deutsch Atkins & Kleinfeldt, P.C. in December 2019. She has extensive experience defending employees and employers in state and federal court in employment litigation matters. She has represented clients on various issues arising out of the New Jersey Law Against Discrimination (NJLAD), the New Jersey Conscientious Employee Protection Act (CEPA),…

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