Mandatory Arbitration Agreements Are Coming To An End: What Family Employers Should Consider

An employee sued a major automaker, Tesla, on allegations that "rampant" sexual harassment created a hostile work environment.

The woman works at a production plant in Fremont, California. She claims sexual harassment, including offensive sexual comments, propositions, and unwanted touching, occurs "nearly every day" at the plant.

The plaintiff alleges that she reported the sexual harassment to the organization's human resources staff, but they failed to take action to stop it.

According to the plaintiff, the sexual harassment caused her and other female employees to feel "degraded, humiliated and traumatized." She claims she experienced emotional stress and panic attacks that forced her to take a medical leave of absence from her job as a result of the sexual harassment.

The plaintiff is seeking monetary compensation and injunctive relief to address sexual harassment at the plant.

The employer has been sued for racial and sexual harassment prior to this incident. The employer has required employees to sign an arbitration agreement consenting to resolve all complaints outside of the court system. Kim Lyons "Tesla accused of 'rampant sexual harassment' in new worker lawsuit" (Nov. 19, 2021).

Commentary and Checklist

Family employers should discuss the use of forced arbitration agreements to resolve sexual harassment allegations with their legal counsel. In the wake of the #MeToo movement, many employers have stopped using arbitration - a non-public, procedure - to settle allegations, in recognition of the fact that secret settlements may allow sexual harassment to continue.

Currently, a bi-partisan federal bill prohibiting use of forced arbitration to resolve sexual harassment allegations has passed through Congress and is expected to be signed by the President into law.

Here are some other ways family employers can prevent sexual harassment:

  • Have a strong policy prohibiting any form of sexual harassment and train all new staff on your policy.
  • In training, stress that harassment can be both physical and verbal and that comments that make other staff uncomfortable will not be tolerated.
  • Provide additional sexual harassment training to supervisors and managers and emphasize that harassment perpetrated by a supervisor is grounds for termination.
  • Train all staff on the procedure for reporting harassment and stress the need for staff to report harassment before it becomes pervasive and severe.
  • Take immediate action to stop reported harassment and make sure that no retaliation occurs.
  • Allow staff to report harassment to a third party and to do so anonymously.
  • Employ a third party to investigate all reports of sexual harassment quickly and thoroughly.
  • Keep the victim safe from retaliation or further harassment during the investigation.
  • Never do or say anything that could make a member of your staff uncomfortable or could be interpreted as sexual harassment or retaliation for reporting sexual harassment.
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