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Executive Order Forbids Federal Contractors from Arbitrating Sexual Harassment and Civil Rights Complaints

Tuesday, August, 12, 2014

President Barack Obama has signed an executive order that bans any contractors bidding on federal contracts from requiring their employees to arbitrate complaints of sexual harassment or discrimination under civil rights laws.  The executive order is not a law, but does set policy for the federal government, which is worth billions of dollars every year in contractor bids.  Under the new policy, any contractor with a binding arbitration clause that covers sexual harassment or civil rights cases will not be eligible for any federal work.


Many consumer advocacy groups cheered the order and expressed the belief that it needs to go even further and that arbitration agreements in nursing homes and assisted living facilities in particular need to be eliminated.


While the President cannot simply force any further reform on binding arbitration laws, the inclusion of such clauses in nursing homes – often buried in fine print – has been controversial, especially when it comes to wrongful death claims.  Many believe that such claims are too serious to be handled by arbitration.  So far, the courts in the U.S. have been split on the matter and no clear consensus of law has been reached.


That’s one reason advocacy groups seized on the Executive Order as an example of progress on the issue of arbitration clauses in general, pointing to it as an example of better thinking on the subject and calling on Congress to follow the President’s lead in reforming the body of law governing arbitration clauses.