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Correctional Officer S&W Award Calc Includes Enhanced IDL Benefit

WorkCompAcademy

Michael Ayala sustained an injury in 2002 while employed as a correctional officer by the Department of Corrections & Rehabilitation/Lancaster State Prison as a result of an attack on prison staff by the inmates. The parties entered into Stipulations with Request for Award that the injury caused 85% permanent disability. The Award was approved on July 31, 2012.

Ayala filed a petition alleging that the injury occurred as a result of serious and willful misconduct by defendant per Labor Code section 4553. The WCJ found in a 2018 Finding of Fact that the employer did not engage in serious and willful misconduct.

However reconsideration was granted in April 2020 and the Appeals Board issued a decision finding that he sustained an injury as a result of serious and willful misconduct by defendant. The decision included an award for a 50% increase in compensation.

The case proceeded to trial again on July 29, 2021 to calculate the 50% increase in benefits. One of the issues was to determine if the computation of the S & W award applies to all the benefits Ayala received, including or the Enhanced Industrial Disability Leave. He was paid enhanced IDL at the rate of his full salary for 845 days, valued at $155,000, 50% of which would be $77,500.

WCJ found that the Appeals Board lacks jurisdiction to award industrial disability leave (IDL) benefits, However, reconsideration was again granted, and the WCAB panel issued another new decision finding that Ayala was entitled to a 50% increase in compensation per section 4553 to be calculated based on the enhanced IDL he received, in the WCAB panel decision of Ayala v Department of Corrections ADJ1360597 (April 2022).

The panel stated that “there is no dispute that the Appeals Board does not have jurisdiction to award IDL, enhanced or otherwise.” However “the Appeals Board unquestionably has jurisdiction to issue and calculate applicant’s serious and willful award that he is entitled to under section 4553.”

Government Code section 19871 provides for state employees to receive IDL (full pay less withholding for taxes and certain deductions/contributions) for 52 weeks when they are temporarily disabled due to an industrial injury. Certain employees receive “enhanced” IDL pursuant to Government Code section 19871.2

Section 4553 provides that the “amount of compensation otherwise recoverable shall be increased one-half.” Ayala contends that “compensation otherwise recoverable” includes enhanced IDL. He argues that the language “otherwise recoverable” extends to compensation beyond what is contained in the definition of compensation in Labor Code section 3207.  He further argues that Government Code section 19870 provides that IDL “means temporary disability as defined in” division 4 of the Labor Code, which is why IDL payments have been considered in calculating aggregate disability payments under section 4656 per Brooks v. Workers’ Comp. Appeals Bd. (2008) 161 Cal.App.4th 1522 [73 Cal.Comp.Cases 447].

The WCAB panel essentially agreed with these arguments. And it went on to discuss the purpose of 4553 since the fundamental rule of statutory construction is that a court should ascertain the intent of the Legislature so as to effectuate the purpose of the law.

In Ferguson v. Workers’ Comp. Appeals Bd. (1995) 33 Cal.App.4th 1613, 1621 [60 Cal.Comp.Cases 275], the Court of Appeal held “that an award for increased compensation due to the serious and willful misconduct of an employer under section 4553 must be calculated with reference to ‘every benefit or payment conferred by Division 4 upon an injured employee’ as broadly defined in section 3207.” The Court in Ferguson acknowledged that section 4553 is not quite consistent with the no-fault principle applicable to the workers’ compensation system.  

Applying the interpretation principles, in this case the panel concluded that “the purpose of an award under section 4553 is to more fully compensate the employee for an injury caused by the employer’s serious and willful misconduct. This purpose is best served by interpreting ‘compensation otherwise recoverable’ as including applicant’s enhanced IDL payments, which provides for a greater amount of compensation than calculating the section 4553 award based on his temporary disability rate.”

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Cal/OSHA Approves Updated COVID-19 Temporary Standards

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Cal/OSHA posted fact sheets and updated its FAQs on COVID-19 Prevention Emergency Temporary Standards (ETS) to reflect revisions adopted by the Occupational Safety and Health Standards Board on April 21, 2022.

The ETS revisions incorporate updated guidance from the California Department of Public Health (CDPH) and make the ETS more flexible if changes are made to CDPH guidance in the future.

The updated ETS standards are in effect now through December 31, 2022. They apply to most workers in California not covered by the Aerosol Transmissible Diseases Standard.

The fact sheets posted include:

– – What Employers Need to Know About the April 21, 2022 Standards
– – COVID-19 Isolation and Quarantine – What Employers and Workers Need to Know (Updated May 7, 2022)
– – Revisions to the COVID-19 Prevention Emergency Temporary Standards Updated May 7, 2022 – FAQs

Cal/OSHA helps protect workers from health and safety hazards on the job in almost every workplace in California. Employers who have questions or need assistance with workplace safety and health programs, including assistance with developing a COVID-19 prevention program at their worksite, can call Cal/OSHA’s Consultation Services Branch at 800-963-9424.

Workers who have questions about COVID-19 hazards at work can call 833-579-0927 to speak with a Cal/OSHA representative during normal business hours. Complaints about workplace safety and health hazards can be filed confidentially with Cal/OSHA district offices.

Employers with Questions on Requirements May Contact: InfoCons@dir.ca.gov or call your local Cal/OSHA Consultation Office.

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Ruling in Kaiser Fraud Case Illustrates Sophisticated Upcoding Strategies

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The United States has intervened in six complaints pending in Northern California federal court, alleging that members of the Kaiser Permanente consortium violated the False Claims Act by submitting inaccurate diagnosis codes for its Medicare Advantage Plan enrollees in order to receive higher reimbursements. The Kaiser Permanente consortium members are headquartered in Oakland, California.

The six lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government and to receive a share of any recovery. The Act also permits the government to intervene in such lawsuits, as it has done here.

Ronda Osinek was the first-filed case and was followed by five other cases: Taylor, Arefi, Stein, Bryant, and Bicocca.The cases were consolidated in June 2021.

The Defendants’ filed a motion to dismiss based on the first-to-file bar in the False Claims Act . The Act provides that “When a person brings an action under this subsection, no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.”

The court therefore was required to compare the Osinek Complaint with the complaints in the other cases to determine whether the cases are related, and thus the plaintiff who was the first-to-file only is allowed to proceed. The federal judge in a May 5 46 page ruling, allowed some claims but the majority of the claims were denied.

In the discussion leading up to the ruling, the opinion provides an excellent summary, if not a full treatise, on how sophisticated such efforts at “upcoding” and other Medicare billing strategies have become.

Adjustments are made to the payments to Medicare Advantage Plans based on demographic information and the diagnoses of each plan beneficiary. The adjustments are commonly referred to as “risk scores.” A beneficiary with more severe diagnoses will have a higher risk score, and CMS will make a larger risk-adjusted payment to the MA Plan for that beneficiary.

How can this be the subject of a whistleblower claim? Osinek alleged that starting around 2007, Kaiser Permanente began a “scheme to upcode diagnoses to ensure Medicare payments for reimbursable, high-value conditions.” This was done was by use of data mining for high value cases, and then determining the diagnoses its doctors would need to make to support the Medicare reimbursement.

She then alleges that there is “an escalation process for physicians who do not agree with the data mining prompts”; “[p]hysicians will have to meet one-on-one with Data Quality Trainers if they refused to make diagnoses changes that are presented by data mining”; “physicians have personal report cards based on how they perform in certain areas [including response to refreshing and data mining prompts], which are tied to their compensation”; and there are “mandatory meetings called ‘coding parties,’ where physicians are gathered in a single room with computers and asked to review past progress notes for addenda related to revised medical diagnoses.”

Another strategy was “refreshing” with Osinek alleging that “Kaiser tracks and rewards physicians based on the percentage of chronic conditions they are able to capture and refresh.” If a patient has a chronic condition, then that condition must be rediagnosed each year ” i.e., refreshed. She alleged the doctor would be told to include the chronic condition as a diagnosis for a visit even if that condition was not at issue in the patient visit.
And Kaiser allegedly provided guidance or policies that supported upcoding. For example, “Kaiser told its physicians to diagnose chronic kidney disease instead of the lower value nephritis or nephropathy.”

Kaiser allegedly had its doctors use addenda to retroactively diagnose – e.g., long after a patient visit, for a condition for which the patient was not treated at the time of the face-to-face visit, based on tests run after the face-to-face visit, to change a diagnosis to a higher value and more complicated form of disease, without proper support/documentation, and/or using boilerplate language.

The 46 page Opinion, then compares and contrasts the allegations in the Osinek complaint, with those in the other cases, which then exposes nuances and embellishments. For example, Dr. Taylor in his complaint claims that his differs from the Osinek Complaint because he has made allegations about Kaiser’s Natural Language Processing (“NLP”) software. “All face-to-face visits to a physician or hospital . . . are run through the NLP software to identify new diagnoses that might be appropriate to use for submission of additional risk adjustment claims.” And goes on to argue that “different frauds were implicated in each case.”

The Court concluded that the nature of wrongdoing claimed by Dr. Taylor here involves different “material elements” from Osinek.

“The Taylor case is not dismissed in its entirety but only in part. Taylor differs materially from Osinek in three ways: (1) Taylor points to a nationwide or corporate-wide problem whereas Osinek is local or regional (i.e., California-centric) in nature; (2) Taylor has identified a fraud related to external providers rather than high-value conditions; and (3) Taylor asserts a problem with Kaiser failing to evaluate the True Positives results yielded by the NLP program.”

A similar process was used to evaluate the other plaintiffs, with some being dismissed in their entirety.

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California Opioid Addiction Physicians Struggle with Sublocade Solution

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In California, where overdose deaths have been rising for years, addiction experts say administering a month’s worth of anti-addiction medication in a single injection holds great potential, particularly for people without housing or who struggle with other forms of instability. Yet despite its promise, the use of injectable buprenorphine remains fairly limited, especially compared with other forms of addiction medication. Researchers have yet to publish studies comparing different ways to administer buprenorphine.

Buprenorphine, one of three medications approved in the U.S. to treat opioid use disorder, works by binding to opioid receptors in the brain and reducing cravings and withdrawal symptoms. And because it occupies those receptor sites, buprenorphine keeps other opioids from binding and ensures that if a patient takes a high dose of a drug like heroin or fentanyl, they are less likely to overdose. Patients often stay on buprenorphine for years.

If Dr. Andrew Herring, who practices at an addiction clinic at Highland Hospital in the heart of Oakland, prescribes a supply of buprenorphine as a tablet or film that is placed under the tongue, the patient must commit to taking the medication at least once a day, and many fall out of treatment. He said this is especially true for his patients experiencing homelessness and those who also use methamphetamine.

Oral forms of buprenorphine have been available to treat addiction since 2002 and can be purchased as a generic for less than $100 a month. Injectable buprenorphine, sold under the brand name Sublocade, received FDA approval in 2017. It has a hefty list price of $1,829.05 for a monthly injection.

Still, addiction experts say, Sublocade use remains limited because of the regulatory hurdles required to dispense it.

Providers must register with the U.S. Drug Enforcement Administration and obtain a waiver to prescribe buprenorphine because it’s considered a controlled substance. In addition, clinics must complete an FDA safety certification program to dispense the medication. And Sublocade can be ordered only by a specialty pharmacy, which must also pass the FDA program.

“At many hospitals, that will mean either a delay in getting this medication on our shelves or just opting out,” said Dr. Rais Vohra, regional director for the California Bridge Network, a state-funded program that supports hospitals in offering treatment for substance use disorders, including Herring’s clinic.

Vohra said Community Regional Medical Center in Fresno, where he works as an emergency physician, is still looking through the documentation requirements to see if the hospital’s pharmacy can distribute the medication — which would make it one of the few Central Valley providers to do so.

Oral buprenorphine, by contrast, is a simple prescription that most local drugstores keep in stock.

“All the hoops that clinicians and patients have to jump through to get this medication is crazy. We don’t do that for any other disease,” said Dr. Hannah Snyder, who runs the addiction clinic at Zuckerberg San Francisco General Hospital across the bay.

“The most important question isn’t whether long-acting injectable bupenorphine is a better solution than sublingual buprenorphine for opioid use disorder,” said Dr. Michael Ostacher, a professor at Stanford University School of Medicine, who is comparing injectable and oral versions of buprenorphine through Veterans Affairs. “The bigger question is how we increase access to treatment for all people who need [the medication].”

California’s Medicaid program does not require prior authorization but providing Sublocade is still a challenge. At the Placerville clinic supported by the California Bridge Network, Dr. Juliet La Mers, the director, said a quarter of her buprenorphine patients get injections. Still, they often wait two weeks before Sublocade arrives from the specialty pharmacy.

In states where Medicaid plans may still require prior authorization, waits for Sublocade can stretch into months. Across the border at the Northern Nevada Hopes clinic in Reno, Nevada, for example, Dr. Taylor Tomlinson said she tells patients that between battles for coverage and pharmacy delays, they might have to wait two months for an injection.

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Workers Seek Order Prohibiting WCAB “Grant and Study” Recon Orders

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On March 4, 2022, a 78 page Petition for Writ of Mandate was filed against the Workers’ Compensation Appeals Board by a representative group of five California injured workers, all of whom claim they have been denied their constitutionally guaranteed right to speedy and unencumbered resolution of their claims for workers’ compensation benefits, as a result of the WCAB’s issuance of what they call “grant and study” orders in response to petitions for reconsideration seeking review of the trial level decisions in their cases.

The petition requests that Court of Appeal find that the “grant and study” procedure is unconstitutional and unlawful, revoke all of the “grant and study” orders issued by the WCAB, and order the WCAB to provide a timetable within which it will render final decisions in all cases where such “grant and study” orders have been issued.

This lead case is entitled Michele Earley, et al. v. The Workers’ Compensation Appeals Board of the State of California, et al., Case No. B318842, and has been assigned to Division of 8 of the Second District Court of Appeal.

The Labor Code requires that petitions for reconsideration be decided by the WCAB within 60 days. However, they say that in many cases the Board, following an unwritten, self-adopted policy and procedure, issues so-called “grant and study” orders which extend that time period indefinitely.

“To make matters worse,” they say, “Petitioners are precluded from seeking adjudication of any further disputes which may arise until the WCAB finally issues its final decision regarding the issues placed on indefinite hold by the ‘grant and study’ orders issued in their cases.”

In response to a recent public records act request, they claim the WCAB provided data demonstrating that it has issued such “grant and study” orders in over 500 cases within a 3-year period alone, many of which remain undecided for years at time.

In the Earley case for example, her trial took place on February 26, 2020, and an award issued in her favor on May 14. However the carrier petitioned for reconsideration of that award. Then on June 29, 2020, the WCAB issued its Opinion and Order Granting Reconsideration “to further study the factual and legal issues presented in this case.” And as of the date of filing the Petition for Writ of Mandate (March 4, 2022) no decision had been issued. (However, the WCAB panel did issue an opinion on March 15, 2022).

According to the docket entries in the case now pending in the Court of Appeal, a number of Amicus parties have been allowed to participate in the case, mostly insurance carriers, and one prominent lien claimant.

The other four petitioning workers allege similar timelines as illustration of long delays in adjudicating their cases on reconsideration.

And on May 4, 2022, the Court of Appeal issued an Order to Show Cause directing the WCAB to show good cause why the relief sought by these injured workers should not be granted. The WCAB is directed to file it’s response by June 3, 2022, and the Petitioners, real parties in interest, and amicus curiae have until June 20, 2022 to reply.

This will be a closely followed case, as the “grand and study” orders have issued in reconsideration cases filed by both applicants and defendants for decades.

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Walmart Avoids $504K in Photo Shoot Model Late Pay Penalties

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Bijon Hill appeared in ten photo shoots organized by Walmart in San Francisco between July 2016 and August 2017 for a total of fifteen days, in non-consecutive periods of one or two days. Hill claims that this amounted to ten separate instances of employment and that she was “discharged” at the end of each photo shoot.

During this time, Hill was represented by Scout Talent Management Agency. Walmart had a contract with Scout and agreed to pay Scout a daily flat rate for each day of modeling services, which was to be passed along to Hill plus a commission. Walmart and Scout’s contract specified that Scout and its “personnel” were independent contractors.

Hill sued Walmart for its failure to pay her immediately after each photo shoot ended and sought more than $540,000 in penalties pursuant to California Labor Code § 203. Walmart removed the case to federal court based on diversity of citizenship. It also filed a third-party complaint against Scout.

The district court denied summary judgment on Walmart’s defense that plaintiff was an independent contractor outside the protection of the relevant Labor Code provisions due to disputes of material fact. However, it granted summary judgment on Walmart’s good-faith defense. The district court concluded that there was a good-faith dispute about whether plaintiff was an independent contractor that made it objectively reasonable for Walmart to believe plaintiff was not an employee.

The Court of Appeals for the Ninth Circuit affirmed the summary judgment in the published case of Hill v Walmart – 21-15180 (April 26, 2022).

8 C.C.R. § 13520 provides that “A willful failure to pay wages within the meaning of Labor Code Section 203 occurs when an employer intentionally fails to pay wages to an employee when those wages are due. However, a good faith dispute that any wages are due will preclude imposition of waiting time penalties under Section 203.“

Moreover, 8 C.C.R. § 13520 explains that “[a] ‘good faith dispute’ that any wages are due occurs when an employer presents a defense, based in law or fact which, if successful, would preclude any recovery on the part of the employee.“

It is undisputed that if Hill were an independent contractor, then she would not be an “employee” entitled to an immediate payment of wages upon discharge pursuant to Labor Code § 201(a) or to recover penalties from Walmart pursuant to § 203.

Consequently, Walmart’s argument that Hill was an independent contractor is a “good faith dispute that any wages are due.” See also Amaral v. Cintas Corp. No. 2, 163 Cal. App. 4th 1157, 1202 (2008) (employer had good-faith defense because its “legal obligations” were “unclear,” and the arguments it made for its ultimately incorrect legal position were not “unreasonable or frivolous”); Barnhill v. Robert Saunders & Co., 125 Cal. App. 3d 1, 8 (1981) (legal ambiguity is a valid basis for a good-faith defense).

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May 2, 2022 – News Podcast

WorkCompAcademy

Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Privileges Protect CIGA and TPA From PTP Defamation Action. WCAB Reverses AOE/COE Using Substantial Medical Evidence Rules. 9th Circuit Reverses Prison Guard Vaccination Order. Californians Involved in Nationwide Health Care Fraud Takedown. $3.8M in COVID-19 Supplemental Paid Sick Leave Violation Citations. Torrance Car Wash Cited for $800K Wage Theft. GAO Audit Finds “Political Interference” With CDC and FDA Findings. Med-Malpractice Payout Limits to Increase in Deal With Legislature. Cal/OSHA Board Approves New COVID Rules Starting in May. WCRI Publishes Workers’ Compensation Laws as of January 1, 2022.

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Travelers Report Says 35% of Injuries Occur During First Year on Job

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The Travelers Companies, the country’s largest workers compensation insurer, just released its 2022 Injury Impact Report. The study analyzed more than 1.5 million workers compensation claims over a five-year period (2015-2019) and revealed that 35% of injuries occur during employees’ first year on the job, regardless of age or industry experience.

Travelers analyzed more than 1.5 million workers compensation claims it received between 2015 and 2019 from a variety of industries and business sizes. Findings were based solely on indemnity claims, where the injured employees could not immediately return to work and incurred medical costs. This is the second analysis of its kind conducted by the company. The first was in 2016 and included data between 2010 and 2014.

The study provided insights in a number of areas related to first-year injury claims.

The most common causes of first-year injuries were overexertion (27% of claims); slips, trips and falls (22%); being struck by an object (14%); cuts and punctures (6%); being caught in or between objects (6%); and motor vehicle accidents (6%).

The most expensive claims, accounting for just 8% of total claims but 26% of total claim costs, were amputations, multiple traumas, electric shock and dislocations.

The restaurant industry experienced the most claims from first-year employees, with 53% of the claims involving the newest workers and representing 47% of total claim costs. The construction industry was a close second, with nearly half of all claims coming from those who were new to the job, driving 52% of the industry’s claim costs.

First-year injuries led to more than 6 million lost workdays over the five-year period studied, representing 37% of all lost days. Among all worker injuries over the same period, construction workers on average missed the most workdays (98) due to an injury, followed by employees in transportation (88) and those in services (69), which includes businesses such as legal, engineering and accounting firms.

Dislocation and inflammation injuries resulted in the most time away from work on average, at 132 and 82 workdays, respectively. Strains and falls both caused workers to miss an average of 69 workdays, followed by motor vehicle accidents (61) and being struck by an object (59).

“Our data underscores the importance of comprehensive onboarding and training programs for employees, particularly as we continue to navigate the challenges of COVID-19 and see many workers starting new jobs,” said Chris Hayes, Assistant Vice President, Travelers Risk Control – Workers Compensation and Transportation. “While new employees are among the most vulnerable, many injuries sustained by employees of any tenure can often be prevented if the proper safety measures are in place.”

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UCSD Smartphone App Screens for Neurological Disease

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Researchers at the University of California San Diego have developed a smartphone app that could allow people to screen for Alzheimer’s disease, ADHD and other neurological diseases and disorders – by recording closeups of their eye.

The app uses a near-infrared camera, which is built into newer smartphones for facial recognition, along with a regular selfie camera to track how a person’s pupil changes in size. These pupil measurements could be used to assess a person’s cognitive condition.

The technology is described in a paper that will be presented at the ACM Computer Human Interaction Conference on Human Factors in Computing Systems (CHI 2022), which will take place from April 30 to May 5 in New Orleans as a hybrid-onsite event.

“While there is still a lot of work to be done, I am excited about the potential for using this technology to bring neurological screening out of clinical lab settings and into homes,” said Colin Barry, an electrical and computer engineering Ph.D. student at UC San Diego and the first author of the paper, which received an Honorable Mention for Best Paper award. “We hope that this opens the door to novel explorations of using smartphones to detect and monitor potential health problems earlier on.”

Pupil size can provide information about a person’s neurological functions, recent research has shown. For example, pupil size increases when a person performs a difficult cognitive task or hears an unexpected sound.

Measuring the changes in pupil diameter is done by performing what’s called a pupil response test. The test could offer a simple and easy way to diagnose and monitor various neurological diseases and disorders. However, it currently requires specialized and costly equipment, making it impractical to perform outside the lab or clinic.

Engineers in the Digital Health Lab, led by UC San Diego electrical and computer engineering professor Edward Wang, collaborated with researchers at the UC San Diego Center for Mental Health Technology (MHTech Center) to develop a more affordable and accessible solution.

“A scalable smartphone assessment tool that can be used for large-scale community screenings could facilitate the development of pupil response tests as minimally-invasive and inexpensive tests to aid in the detection and understanding of diseases like Alzheimer’s disease. This could have a huge public health impact,” said Eric Granholm, a psychiatry professor at UC San Diego School of Medicine and director of the MHTech Center.

The app developed by the UC San Diego team uses a smartphone’s near-infrared camera to detect a person’s pupil. In the near-infrared spectrum, the pupil can be easily differentiated from the iris, even in eyes with darker iris colors. This enables the app to calculate pupil size with sub-millimeter accuracy across various eye colors. The app also uses a color picture taken by the smartphone’s selfie camera to capture the stereoscopic distance between the smartphone and the user. The app then uses this distance to convert the pupil size from the near-infrared image into millimeter units.

The app’s measurements were comparable to those taken by a device called a pupillometer, which is the gold standard for measuring pupil size.

The researchers also included various features in their app to make it more user friendly for older adults.  The researchers worked with older adult participants to design a simple app interface that allows users to self administer pupil response tests. This interface included voice commands, image-based instructions, and a cheap, plastic scope to direct the user to place their eye within the view of the smartphone camera.

The Digital Health Lab is continuing this work in a project to enable similar pupillometry function on any smartphone rather than just the newer smartphones. Future studies will also involve working with older adults to evaluate home use of the technology. The team will work with older individuals with mild cognitive impairment to test the app as a risk screening tool for early stage Alzheimer’s disease.

This work was funded by the National Institute of Aging. To learn more about this project and other works by the UCSD Digital Health Lab, see their webpage and also download the paper on this device, “At-Home Pupillometry using Smartphone Facial Identification Cameras.”

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Biden Signs Law Limiting Employer Arbitration Mandates

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The Federal Arbitration Act or FAA, enacted February 12, 1925, is federal law that provides for private dispute resolution through arbitration. The FAA recognizes benefits to society as a result of resolution of disputes in expeditious systems. It is most often implemented by use of an arbitration clause in the contract between the parties.  

An arbitration clause is a clause in a contract that requires the parties to resolve their disputes through an arbitration process. Mandatory arbitration clauses are widespread in the United States. For example, 15 of the largest 20 U.S. credit card issuers, and 7 of the 8 largest cell phone companies have arbitration clauses for resolution of disputes with customers.

In employment law, many employers have mandatory arbitration clauses in contracts with their employees, for the purpose of limiting the possibility of extreme jury verdicts in favor of former employees, as well as the risk of costly class action litigation.

Section 2 of the FAA declares that arbitration provisions will be subject to invalidation only for the same grounds applicable to contractual provisions generally, such as unconscionability or duress. Consequently, most state law that attempts to disfavors or limit the enforcement of mandatory arbitration agreements are preempted by the FAA.

Substantial federal and state litigation has evolved over the years on the issue of federal preemption precluding the ability of any state’s attempt to restrict an employer’s rights to force mandatory arbitration of disputes with employees. Generally speaking, individual states have not been successful in litigation efforts to limit the preemption provisions of the FAA.

However, President Biden has just signed into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021. This Act was introduced in 2017.

The Act amends the Federal Arbitration Act to give employees who are parties to arbitration agreements with their employers the option of bringing claims of sexual assault or sexual harassment either in arbitration or in court.

The Act amends the FAA to include a new section, which states, in part: “[A]t the election of the person alleging conduct constituting a sexual harassment dispute or a sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct, no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.”

Thus this new Act is an employment law game changer. It gives employees the option to circumvent arbitration agreements and class or collective action waivers with respect to sexual assault and sexual harassment claims.

The Act applies to all claims that arise or accrue after March 3, 2022, regardless of the date of the agreement at issue. The Act, however, does not affect claims that arose or accrued before March 3, 2022.

The Act does not affect otherwise valid arbitration agreements for claims that are not related sexual assault and sexual harassment. What is unanswered in the new law, is how it will apply when sexual assault and sexual harassment claims are intermixed with other employment law claims in a single litigation filing.

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