Sexual harassment in the workplace is a serious issue, and employees who experience it often seek legal remedies to hold employers accountable. Many companies include arbitration clauses in employment contracts, requiring employees to resolve disputes through arbitration rather than in court. These agreements can significantly impact a worker’s ability to pursue claims in court.

In Minnesota, the use of arbitration agreements in sexual harassment cases is a highly debated topic, with legal and ethical concerns about whether they protect businesses at the expense of victims.

What Is an Arbitration Agreement?

An arbitration agreement is a contract in which employees agree to resolve legal disputes through arbitration rather than through the court system. Arbitration is a private, out-of-court process where a neutral third party (the arbitrator) hears both sides and makes a binding decision.

While arbitration is often promoted as a faster, less costly alternative to litigation, it has been criticized for favoring employers and limiting employees' ability to hold companies publicly accountable for misconduct.

The Impact of Arbitration Agreements on Sexual Harassment Claims

Limits on Public Accountability

Unlike court cases, which are typically public unless sealed, arbitration proceedings are confidential. This means that allegations of sexual harassment, even when proven, may not become public knowledge. While this can protect the privacy of all parties involved, it also prevents systemic harassment issues from being widely exposed, allowing problematic workplace cultures to persist.

Employer-Friendly Outcomes

Studies suggest that arbitration tends to favor employers over employees. Since businesses often choose the arbitration firm and arbitrators, there is concern that arbitrators may be biased toward repeat clients—employers who frequently use their services. This can put employees at a disadvantage when seeking justice.

No Jury and Limited Appeal Rights

In arbitration, there is no jury, and appeal rights are extremely limited. Unlike in court, where a jury might be more sympathetic to a victim’s experience, an arbitrator has sole discretion in deciding the case, making it harder for employees to secure a fair outcome.

Faster, But at What Cost?

One of the main arguments in favor of arbitration is that it is faster than litigation. However, speed does not always translate to fairness. Employees might feel rushed into an unfair settlement, and the lack of transparency in arbitration makes it difficult to assess whether similar cases receive consistent treatment.

Minnesota’s Legal Landscape on Arbitration Agreements

Minnesota follows federal law regarding arbitration, meaning that arbitration agreements are generally enforceable unless they violate contract law principles such as fraud, duress or unconscionability. However, recent legislative efforts at the federal level have made significant changes in how arbitration applies to sexual harassment cases.

In March 2022, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act was signed into law. This legislation allows victims of workplace sexual harassment and assault to take their cases to court even if their employment contract contained an arbitration agreement. This removes the barrier that previously prevented many survivors from having their cases heard in a public forum.

For Minnesota employees, this means that even if their contract contained an arbitration clause, they still have the right to sue their employer in court if the dispute involves sexual harassment or assault. Employers must ensure their policies reflect these changes to avoid legal complications.

How Employers Can Protect Themselves From Sexual Harassment Claims

Implement Strong Anti-Harassment Policies

Employers should have clear, written policies against sexual harassment, outlining reporting procedures, investigation protocols and disciplinary actions for violators. Employees should be required to review and acknowledge these policies upon hiring.

Conduct Regular Training Sessions

Minnesota employers should strongly consider mandating periodic sexual harassment training for all employees, including management. This training should cover recognizing harassment, proper reporting channels and legal rights for victims.

Regular training can also help protect businesses from liability by demonstrating that employees were properly informed about harassment policies and expectations.

Provide Multiple Reporting Channels

Employees should feel safe reporting harassment without fear of retaliation. Businesses should offer multiple reporting methods, including anonymous options, to encourage victims to come forward.

Foster a Culture of Accountability

Company leadership must actively promote a culture that does not tolerate harassment. Taking complaints seriously and ensuring fair investigations can prevent legal issues while building a safer workplace.

Seeking Legal Help for a Sexual Harassment Case in Minneapolis–St. Paul?

Contact Minnesota Lawyer Referral and Information Service (MNLRIS) at (612) 752-6699 to speak with a referral counselor today. They can connect you with an experienced attorney who can help you navigate arbitration agreements, workplace harassment policies and legal claims.