Will the Provision Hold Up Under Higher Court Scrutiny?
New York’s new anti-sexual harassment law states that New York employers may no longer include mandatory arbitration clauses for sexual harassment claims. Furthermore, settlements regarding sexual harassment claims may not include non-disclosure provisions. The exception would be when the complainant prefers to include such a provision.
Reasons the Arbitration Provision May Not Stand
In a recent case, Mahmoud Latif v. Morgan Stanley & Company, the company moved to compel arbitration of Latif’s claims based on their arbitration agreement.
The arbitration agreement stated that covered claims would include statutory discrimination, harassment and retaliation claims.
Latif alleged that he was sexually assaulted by a female supervisor, was subjected to inappropriate comments regarding his sexual orientation, inappropriate touching, sexual advances and offensive comments about his religion. He reported the incidents to the company’s Human Resources department.
The only disputed aspect between the parties is whether the complaint is subject to the arbitration agreement based on the recently enacted New York anti-sexual harassment law.
Ruling in the Case
The judge granted Morgan Stanley’s motion to compel arbitration of the Latif claim. The reason given was that “the Federal Arbitration Act requires courts to enforce covered arbitration agreements according to their terms.”
The judge stated that “the Supreme Court has instructed that the FAA reflects ‘both a liberal federal policy favoring arbitration and the fundamental principle that arbitration is a matter of contract.'”
Basically, the federal law takes precedence over state law. State law is subject to preemption, which means that a higher court or authority displaces a lower court or authority regarding matters that are in conflict.
If you have employment related issues, our attorneys at Stephen Hans & Associates are glad to answer your questions, provide legal advice or representation. We have decades of experience representing employers in work-related issues.