CHLA California Lodging News May/June 2022

6 CALIFORNIA LODGING NEWS HOTELS TYPICALLY REQUIRE EMPLOYEES TO agree to mandatory arbitration of many potential employment claims. But, a federal law signed by President Biden on March 3 has placed limits on mandatory arbitration in cases involving claims of sexual assault and harassment. The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 is intended to facilitate access to the court system for such disputes by limiting arbitration to situations where employees and employers mutually elect arbitration after a dispute has arisen, rather than being forced into arbitration through a predispute agreement. The Act applies to all disputes arising, or currently pending, on or after March 3, 2022, and includes alleged sexual harassment and sexual assault claims based on the conduct of guests or customers toward employees, as well as conduct by employees toward other employees. The new law amends the Federal Arbitration Act (FAA) in three meaningful ways. It: • Invalidates employment pre-dispute agreements and class action waivers that require claims related to sexual assault or sexual harassment to be arbitrated on an individual basis; • Ensures that the employee who signs an arbitration agreement has complete autonomy in deciding whether to arbitrate sexual harassment or sexual assault claims or to pursue such claims in court, either individually or on a collective basis; and • Provides that regardless of the contractual terms of the arbitration agreement, the enforceability of the agreement as to covered claims must be decided by a court, not an arbitrator. While the changes are meant to create more transparency concerning remedies for workplace sexual misconduct, there are a number of issues that remain unresolved. For example, it’s not clear if the law allows an employee alleging a sexual harassment claim along with another related employment claim to litigate the entire dispute in court, despite a signed mandatory arbitration agreement. Another open question is whether certain retaliation claims are covered, such as a claim of retaliation for reporting an internal complaint of sexual harassment without a standalone claim of sexual harassment or assault. Finally, the law is silent on the enforceability of jury waivers, so in California whether such waivers are enforceable or even permissible likely is an issue of state law. Pragmatic Considerations for Excluding Other Claims from Mandatory Arbitration Agreements In addition to legal considerations around arbitration agreements, hotels should consider other factors like employee relations, company culture, and public/customer relations issues. The new law doesn’t prohibit employers from compelling arbitration for claims involving race, disability, age discrimination, or other civil rights claims, but it’s worth asking what message is conveyed if you force some types of cases to arbitration and bar class actions, yet litigate sexual harassment matters in court and on a class basis? We recommend Do Mandatory Employment Arbitration Agreements Still Have Utility in the Workplace? By Keith Grossman, Glen Kraemer, and Anna Pham