When Your Employer’s Implementation of a Mandatory Arbitration Policy May Qualify as an Adverse Employment Action for Your Retaliation Claim in New York

Most people, when they contemplate workplace retaliation, picture a worker who is demoted or fired for having filed a discrimination or sexual harassment lawsuit (or EEO claim.) Retaliation in the workplace can take many forms beyond just that, though. If you believe you’ve been punished at work because you stood up for yourself (or others) in opposition to illegal practices in the workplace, you ought to get in touch with a knowledgeable New York employment lawyer right away.

One of the more hotly debated topics within employment law is mandatory arbitration agreements or, more specifically, the interconnection of mandatory arbitration agreements and claims of discrimination. New York State law says that such agreements are void and unenforceable in that context, but that law has experienced a rocky road in court across the last three years. At least two different federal judges in New York have ruled that federal law preempts CPLR Section 7515, allowing the employer to transition the case from court to arbitration.

Sometimes, though, the significance of your mandatory arbitration agreement goes beyond the procedural question of where your case will be litigated and into the question of whether the initiation of the agreement itself was a punitive act done in retalaition. That was the case for M.C., a woman who was the head of recruiting at a New York City financial technology firm.

During her employment, M.C. allegedly endured an array of inappropriate behaviors from men, including sexual propositions and others questions about sex from the company CEO, the company COO, the Head of Member Services, M.C.’s own supervisor, and multiple others.

In September 2019, M.C., represented by counsel, filed a complaint. Shortly thereafter, the employer allegedly announced “a mandatory arbitration policy that required employees ‘to arbitrate covered claims, instead of litigating them in court.’”

The policy was similar to many types of mandatory arbitration agreements in that it basically required workers to acquiesce or quit. The policy said that “by continuing… employment for three days after receipt of the agreement,” a worker would be “deemed” to have accepted the terms of the policy.

Two days after receiving the policy, M.C. filed her lawsuit and the employer effectively terminated her.

In the lawsuit, M.C. alleged multiple claims, including hostile work environment and retaliation. One thing to note when it comes to retaliation claims is that the “hurdle” you have to clear to pursue your claim is different under the New York City Human Rights Law as compared to the New York State Human Rights Law or Title VII of the federal Civil Rights Act. Federal law and state law each require proof that the employer took adverse action against you because opposed an “unlawful employment practice.” The New York City Human Rights Law erects a slightly more favorable standard, demanding a showing that you suffered retaliation because you “opposed any practice forbidden” by the New York City Human Rights Law.

M.C.’s retaliation claim, and the judge’s ruling on it, is one of the most interesting parts of this decision. In a retaliation case, you need two critical pieces: (1) proof that you engaged in protected activity in opposition to discrimination and/or harassment, and (2) proof that your employer engaged in an adverse employment action against you based on that protected activity.

The ‘Timing and Implementation’ of the Policy Were Keys in This Worker’s Circumstance

In M.C.’s case, the protected activity was clear and obvious: her allegations of sexual harassment, including those detailed in her lawsuit. The adverse action, however, was more the centerpiece of dispute. The employer argued that its institution of a mandatory arbitration policy could not possibly constitute an adverse employment action “because an agreement to arbitrate does not deprive a party of substantive or procedural rights and, instead, merely establishes an alternative forum for adjudicating those rights.”

The court, however, ruled that a mandatory arbitration policy potentially could be an adverse employment action, depending on the facts surrounding its institution and implementation. In M.C.’s case, those facts were present. The court stated the “timing and manner” of the implementation of the policy, taking place only one month after M.C. retained an attorney and paired with the employer’s “insistence that [M.C.] agree to arbitrate” her sexual harassment claims in order to keep her job, was enough to establish a viable adverse employment action.

When you realize that your employer is punishing you because you took a stand against discrimination and/or sexual harassment (whether the target was you or someone else,) it is time to fight back. Get in touch with the skilled New York employment retaliation attorneys at Phillips & Associates. Retaliation is both wrong and a violation of New York City, New York State, and federal law. Contact us online or at (212) 248-7431 today to set up a free and confidential consultation to find out how we can help you.

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