Uh oh.
You just found out that a former employee sued your company for sexual harassment/discrimination. You should be concerned, but you’re not. Your knee-jerk reaction is to move to dismiss the case. Why? Your employee signed an arbitration agreement, so you’re confident you can win a motion to compel arbitration.
But you can’t — even if the lawsuit includes other claims.
Why? The short answer: The federal Ending Forced Arbitration Act (EFAA) passed in March 2022 says so. Read on and let’s see what we can learn from a real-life case example.
The EFAA didn’t stop fintech company Current from trying, to dismiss a sexual harassment case–but it didn’t work. Briefly, here’s what went down:
Isabelle Mitura, a woman of Korean descent, began working as Current’s Head of Talent in 2021. She alleges that she regularly faced demeaning discriminatory comments from CEO Stuart Sopp and Head of People Alex Sergiyenko made in front of co-workers, which included calling her an “old Asian woman with no kids”, responding to a proposed menstruation leave policy by asking “do you even still menstruate, Isabelle?”, asking whether her breast cancer (for which she sought FMLA leave) was because her “breasts were so large”, saying in a meeting that “all Isabelle does is laugh and nod her head and agree” (playing on stereotypes of Asian women).
Current also refused to designate her leave as FMLA leave and then fired her before she could return to work. Mitura alleged sex discrimination, FMLA interference and retaliation, Equal Pay violations, and retaliation under NYS’ Human Rights Laws, among others.
Current moved to dismiss her claims, or alternatively to compel arbitration (presumably because she had previously signed an arbitration agreement). It argued that her main claims were not sex discrimination and that she didn’t adequately plead the sex discrimination claims.
The court disagreed, ruling that Ms. Mitura had pleaded sufficient facts to support sex discrimination claims, and therefore the EFAA rendered any arbitration agreement unenforceable. Current then argued that the New York State Human Rights Law (the NY counterpart to the Title VII of the Civil Rights Act) didn’t apply because she was living in Texas (temporarily for medical treatment) when she was fired. Since the alleged discrimination happened in NY however, the court had no trouble rejecting that argument. (Seriously, if you’re resorting to those sort of nit-picky technicalities that’s usually an indicator that you don’t really have a good defense — and your “defense” probably won’t succeed.)
Note to self: when an employee sues and at least one claim is sexual harassment or sex discrimination the EFAA will most likely render unenforceable any arbitration agreement you compelled the employee to sign.
So, Current can either settle or face a lawsuit — and a messy, expensive one, too.
So, I’m just gonna say it. If you are resorting to these types of arguments, it’s not a good sign for you. If you can’t practice basic decency with your employees, you won’t get far playing the victim card when employees fight back. You’re certainly not likely to get sympathy.
You also won’t get far in attracting and retaining a good team of employees, and your company won’t get far without that team. Mitura had impressive an impressive track record. Current went to great lengths to get her, and then sabotaged its ability to keep her. It’s not enough to throw money at a challenge. Money can be a great big help. But it will never be a substitute for effort, work, personal investment, commitment. If you don’t live your brand, if you don’t honor your commitments or live your truth, then yes, eventually what you pieced together will unravel — and the longer it takes for it to catch up with you, generally speaking, the messier it is.
If you don’t want that to be your company, follow Current’s example — of what NOT to do. Your friendly employment counsel can help you be different –and better. Unless you want to be sued. Yes, your company has a right to make its own decisions. It also has the right to live with the consequences, whether seemingly positive or negative. Welcome to the adult world.
Are you an employer interested in proactively addressing workplace challenges and company culture? Visit my website, http://www.janetteleveylaw.com to contact me for a complimentary 20-minute consultation.
Watch my television interview on Good Morning HR with Mike Coffey on Mental Health and the ADA.
Contents of this post are for educational/informational purposes only, are not legal advice, and do not create an attorney-client relationship. Consult with competent employment counsel in the state(s) in which you employ people with your specific questions.
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