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President Signs Bill Guaranteeing Day in Court for Defense Contractors’ Employees Subjected to Harassment and Discrimination on the Basis of Sex, Race, Color, National Origin, or Religion

On December 19, 2009, President Obama signed the Defense Appropriations bill into law. The bill included an amendment added by Minnesota Senator Al Franken and referred to as the “Franken Amendment” that precludes employers who enter into contracts with the Department of Defense from entering into pre-dispute “agreements” with their employees that require the employee to give up their right to pursue harassment and discrimination claims under Title VII in court in favor of private binding arbitration. The new law also prevents defense contractors from enforcing already existing pre-dispute arbitration agreements.

The amendment was prompted by the gang rape of a KBR/Halliburton employee in Iraq by her coworkers. When the employee attempted to pursue a claim against her employer in court the employer, KBR, kept her claim out of court by using a fine print agreement that it had required her to sign when she started work with KBR waiving her right to a jury trial and instead agreeing to submit all claims against KBR to a private and confidential arbitration run by KBR.

The KBR case reflects a growing trend as more and more employers have come to require their employees to sign away their right to pursue civil rights claims in court as a condition of their employment.

Speaking in support of the amendment, Senator Franken stated, “Arbitration is conducted behind closed doors, doesn’t allow you a jury of your peers, and fails to establish precedent. Many of our nation’s most cherished civil rights were established by individuals bringing claims in court. Arbitration has its place in our system, but handling claims of sexual assault and egregious violations of civil rights is not its place.”

The new law precludes employers from compelling arbitration with respect to “all claims arising under Title VII of the Civil Rights Act of 1964, any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.”

This law is the first of its kind. Employee advocates are hopeful that the passage of the Franken Amendment will lead to additional legislation guaranteeing employees their day in court. Another more broadly worded bill called the Arbitration Fairness Act would preclude pre-dispute agreements waiving a party’s right to pursue claims in court in all employment disputes, consumer disputes, and civil rights claims. This bill is currently pending in the House and Senate.