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NY legislators rebuke EY over arbitration policy

A bipartisan group of 67 New York State Legislators, led by state senators Liz Krueger and Alessandra Biaggi, and assemblymembers Aravella Simotas and Jo Anne Simon, released a letter on 31 July to EY chair and CEO Carmine Di Sibio, rebuking the firm for its policy of forced arbitration for harassment and discrimination claims. The letter was motivated by the experience of Karen Ward, a former EY partner, who has been forced into arbitration over her claim to the US Equal Employment Opportunity Commission (EEOC) that she was fired for speaking out against ongoing sexual and gender-based harassment and discrimination at the firm.

"For all the progress women have made to achieve equality in the workplace, some companies still have not gotten the memo that the days of the boys' club are over," said senator Krueger. "It is 2019, not 1959, and it is simply unacceptable to perpetuate a culture of harassment and discrimination at work. Ernst & Young claims to be a leader on gender equity, yet their forced arbitration requirements effectively slam shut the doors on their employees' access to justice. They can and must do better."

In September, 2018, Ms Ward filed a charge with the EEOC alleging sexual harassment and gender discrimination at Ernst & Young. After filing the charge, she publicly requested that then-EY CEO Mark Weinberger release her from a contractual requirement to use arbitration to resolve the claim. Since the time the contract was signed, New York State has passed legislation to ban the future use of such forced arbitration agreements in cases of harassment and discrimination.

"Sexual harassment and discrimination in the workplace often derive from an abuse of power, and a forced arbitration agreement is a continuation of that abuse," said senator Biaggi. "It is unacceptable to put a $100,000 price tag on justice for an employee seeking accountability for the harm they have endured. This year we passed S6577/A8421 which will eliminate arbitration agreements for cases of sexual harassment and discrimination to stop employers like Ernst & Young from silencing victims for speaking up. I commend Ms Ward for coming forward, and demand that Ernst & Young eliminate this predatory policy immediately and start practicing the values they preach."

In addition to continuing to require arbitration, EY has refused to pay the costs of the arbitration, and the arbitrators have ordered the parties to split the cost, leaving Ms Ward with a $185,000 bill merely to begin the process of hearing her claim, above and beyond any costs she may incur retaining her own lawyers. With the case still in the discovery phase, she will likely have to pay well over $200,000 to complete the process. By comparison, had she been permitted to file in court, she would only have had to pay a $450 fee.

Ms Ward has filed a declaratory judgment action in federal court seeking to invalidate the arbitration agreement, claiming that no victim of sexual harassment or discrimination should be required to pay hundreds of thousands of dollars to have their claims heard.

“The case of Karen Ward is a prime example of the evils of forced arbitration agreements and the imbalanced power dynamic within this dispute resolution system," said assemblymember Simotas. "Ernst & Young’s policy is an oppressive relic used to put up barriers and prevent targets of harassment from coming forward. This case highlights just how much workers, across all industries, need protections against mandatory arbitration clauses for discrimination claims. These clauses should not be allowed to silence workers and keep discrimination and sexual harassment tucked away in the closet.  I applaud Ms Ward for pursuing justice and I urge Ernst & Young to do the right thing and allow her to have her sexual harassment and gender discrimination claims heard in court."

“Forced arbitration in employment cases is problematic and in cases of harassment and discrimination is unacceptable, because it serves as a barrier to accessing the protections of the law, by heaping unnecessary costs on victims of discrimination and harassment, and generally limiting workers’ ability to get a fair hearing,” said assemblymember Simon. “I’m pleased to stand with my colleagues in the Assembly and State Senate to urge Ernst & Young to reconsider its reliance on forced arbitration in cases of gender based discrimination and harassment in the case of Karen Ward and all of its employees.”

In the letter, legislators take EY to task for requiring Ms Ward to participate in exorbitantly expensive arbitration, saying "you are effectively silencing her and sending a message to your other employees that their claims will not be given a fair hearing." Additionally, they charge that EY is failing to live up to the goals of its own ‘Women. Fast Forward’ programme, saying ‘it is time for Ernst & Young to move beyond lip service and make the systemic changes necessary to truly be a leader in addressing inequality in the workplace.’
 In response to the state legislators, EY’s director of state relations in its office of public policy Tammy R. Velasquez, wrote: “As one of the largest employers in the State of New York, EY fully shares your commitment to these important goals: a diverse, inclusive and safe workplace, free of harassment or of any kind, and full compliance with all applicable laws and regulations.

“We value your input and appreciate the perspectives you and your legislative colleagues bring to the important policy questions around the fairness of the arbitration process and specifically the allocation of the costs of arbitrations.”

In an open letter to Carmine Di Sibio on 5 August, Ms Ward responded that Velasquez’s letter was ‘completely inadequate and is an insult not only to me, but to all women at EY and beyond’.

She added: “It is well known in the #MeToo era that forced arbitration perpetuates sexual harassment and discrimination in the workplace by eliminating a woman’s fundamental right to seek justice in court when her employer engages in unlawful behavior. If EY is truly committed to a workplace that is ‘free of harassment or of any kind,’ it would not require any woman to sign away her right to pursue any claims she might have against EY in open court before a jury of her peers — let alone force her to pay hundreds of thousands of dollars just to have her claims heard in secret arbitration.”

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