By Meredith J. Maroney
Recently, federal law shifted to focus on providing more rights to employees who may face sexual harassment and sexual assault in the workplace. In March 2022, the United States Congress enacted the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which precludes employers from mandating that their employees participate in arbitration for sexual harassment and sexual assault claims. The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act applies to disputes or claims that arises or accrue on or after the date of the enactment, which was March 3, 2022. The Tennessee Court of Appeals recently clarified whether the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act applied prospectively or retroactively. Grimsley v. Patterson Co., LLC, 2023 Tenn. App. LEXIS 462 (Tenn. Ct. App. Nov. 7, 2023).
Grimsley v. Patterson Co., LLC
Patterson Co., LLC hired the Plaintiff Natalie Grimsley as a Neighborhood Sales Manager in 2014. Id. at *1-2. Throughout her time at Patterson Co., LLC, Ms. Grimsley signed numerous agreements, which contained sweeping arbitration provisions. Id. at *2. Ms. Grimsley signed the most recent agreement containing a robust arbitration provision in January 2021. Id. at *2-3. In 2021, Patterson Co., LLC hired Michael Bottoms who began supervising Ms. Grimsley. Ms. Grimsley alleged that Mr. Bottoms made sexual remarks toward her and sexually harassed her. Id. at *2-3. She also alleged that Patterson Co., LLC “did not have any corporate safeguards, such as a human resources department, employee handbook, or sexual harassment policy, and that the absence of safeguards empowered Mr. Bottoms to continue this behavior.” Id. at *2. Ms. Grimsley sued Patterson Co., LLC for sexual harassment, and Patterson Co., LLC “moved to compel arbitration.” Ms. Grimsley argued against compelled arbitration, arguing that although the alleged sexual harassment she endured predates the enactment of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, the law still applied in order “to further Congress’s stated desire to support victims of sexual harassment.” Id. at *4. The trial court held that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act applied to Ms. Grimsley’s case because what matters is not that the claim or dispute arose or accrued after the law’s enactment but that she filed her Complaint after the law’s enactment. Id. The Tennessee Court of Appeals disagreed and reversed the trial court’s ruling. Id. at *5.
The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act clearly states that “[t]his Act, and the amendments made by this Act, shall apply with respect to any claim or dispute that arises or accrues on or after the date of enactment of this Act [March 3, 2022].” Id. at *6-7. On appeal, “Ms. Grimsley argues that the word ‘claim’ links to the word ‘arise’ and the word ‘dispute’ links to the word ‘accrues.’” Id. at *7. In her interpretation, “‘arises’ would be the date the Plaintiff knew or should have known of a dispute [and] . . . [t]he word ‘accrues’ would be the date the lawsuit was filed (or the date the dispute accrued related to the arbitration provision).”
The Tennessee Court of Appeals rejected this interpretation of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act for numerous reasons. Id. at *8. For example, the conventional understanding of when “the latest potential date that a dispute or claim arises or accrues is the date when a plaintiff becomes aware of her injuries.” Id. at *9. Additionally, “this conventional understanding is in accordance with how courts have interpreted similar language in the context of Title VII sexual harassment claims in which the key dates are linked to when the plaintiff knew or should have known of the discriminatory act or when the adverse employment action is taken.” Id. Further, “Congress expressly employed the language of the case filing in addressing the scope of the Act but did not do so in setting the effective date of the Act.” Id. Lastly, the clear language of the statute, which includes “‘dispute or claim’ and ‘arises or accrues’ ‘after the date of enactment’ . . . has plainly provided for prospective rather than retroactive application of the Act.” Id. at *12. Therefore, the Tennessee Court of Appeals “reverse[d] the trial court’s decision because the harassment of the Plaintiff and her constructive discharge occurred prior to the effective date of the Act.” Id. at *1.
Further Developments in Federal Authority
On December 7, 2022, President Biden signed the Speak Out Now Act into law. The Speak Out Now Act explicitly bans all nondisclosure clauses and non-disparagement clauses regarding a sexual assault or sexual harassment dispute that is “agreed to before the dispute arises . . . in which conduct is alleged to have violated Federal, Tribal, or State law.” S.4542(4)(a). This prohibition applies to all agreements, regardless of when they were executed, as long as the sexual assault dispute or sexual harassment dispute was brought under federal, tribal, or state law on or after December 7, 2022. S.4542(5). This means that unlike the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, the Speak Out Now Act does apply retroactively.
The National Labor Relations Board echoed the Speak Out Now Act in its ruling in McLaren Macomb, 372 NLRB No. 58 (Feb. 21, 2023). While not explicitly about sexual harassment or assault, the opinion found that sweeping confidentiality and non-disparagement provisions in severance agreements violate the National Labor Relations Act. Id. Such provisions could “reasonably tend to coerce the employee from filing an unfair labor practice charge or assisting a Board investigation into the Respondent’s use of the severance agreement.” Id. Additionally, similar provisions could preclude “an employee from assisting coworkers with workplace issues concerning their employer, and from communicating with others, including a union, and the Board about his [or her] employment.” Id.
Employer Considerations
Employers should review their existing agreements with their employees to account for these recent federal changes. If employers require employees to participate in mandatory arbitration for employment disputes, employers should explicitly state that mandatory arbitration does not apply to sexual harassment or sexual assault claims or disputes that occur on or after March 3, 2022. For sexual harassment and sexual assault claims or disputes that arose prior to March 3, 2022, that are subject to mandatory arbitration, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act should not preclude those claims or disputes from being arbitrated.
Under the Speak Out Now Act, employers should review the non-disparagement and nondisclosure provisions in their agreements with their employees to determine whether they violate the Speak Out Now Act. Although these agreements usually contain a severability provision that aims to protect the parties to the agreement by making each clause severable in the event that a clause is voided, it is best practice to eliminate the unenforceable clause going forward. Additionally, employers may wish to revise these agreements altogether and have employees re-execute them subject to each agreement’s modification clause. While reviewing these agreements, employers should add language (if they do not already have similar language) that explains to employees that the non-disparagement provision, the nondisclosure provision, and the agreement as a whole will not be interpreted or enforced to infringe on employees’ rights under the National Labor Relations Act.
Associate Attorney
Rainey, Kizer, Reviere, & Bell PLC
www.raineykizer.com