The United States Department of Defense (DOD) recently published an interim rule prohibiting defense contractors from requiring employees and independent contractors to arbitrate claims. The new rule would apply to contractors receiving funds under the fiscal year 2010 Defense Appropriations Act ("Appropriations Act") that are in excess of $1 million. The interim rule, which implements a provision in the Appropriations Act, stems from the alleged rape of a former employee by co-workers while stationed in Iraq. The prohibition on arbitration would apply to claims under Title VII of the Civil Rights Act of 1964 or torts related to sexual assault or harassment only. Torts related to or arising out of sexual assault or harassment may include assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention. Because the interim rule does not define or limit the phrase "claim under Title VII," it appears to cover any allegation of discrimination prohibited by Title VII, including claims of discrimination on the basis of race, color, religion, or national origin that do not relate to sexual assault or harassment. Exceptions exist under the interim rule, including a waiver for national security concerns. Comments on the interim rule may be submitted through July 19, 2010.
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