Forced Arbitration Agreements Are Now Banned in Sexual Assault and Sexual Harassment Cases
Knowledge

Forced Arbitration Agreements Are Now Banned in Sexual Assault and Sexual Harassment Cases

Key Takeaways

  • The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 is effective immediately and applies to any cases of sexual assault or sexual harassment asserted after its effective date that may be covered by existing mandatory arbitration agreements.

  • The Act invalidates any pre-dispute agreement that prohibits or waives an employee’s right to participate in a joint, class, or collective action in court, arbitration, or any other forum that involves a pre-dispute sexual assault or sexual harassment claim.

  • Employers should review their mandatory arbitration agreements to exclude language involving sexual harassment and sexual assault claims.

 

On February 18, we reported that Congress passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the Act) barring an employer’s enforcement of pre-dispute arbitration for sexual assault or sexual harassment claims. On March 3, 2022, President Joe Biden made it official and signed the Act into law. The Act gained bipartisan support in a divided Congress and was passed unanimously by the Senate.

To recap, the Act amends the Federal Arbitration Act and allows employees to invalidate a pre-dispute arbitration agreement with their employer to the extent their claims involve sexual assault or harassment. The Act also invalidates any pre-dispute agreement that prohibits or waives an employee’s right to participate in a joint, class, or collective action in court, arbitration, or any other forum that involves a pre-dispute sexual assault or sexual harassment claim.

The Act does not automatically moot or invalidate a prior agreement to arbitrate a sexual assault or harassment claim. Instead, it gives alleged victims an opportunity to set aside the arbitration clause and proceed to court instead. The Act applies to “any case,” not just any “claim,” relating to sexual harassment or assault disputes.

The Act is effective immediately and applies to both previously executed arbitration agreements and any future agreements. However, it only prohibits mandatory arbitration with respect to new sexual assault or harassment claims made after its effective date.

The reaction to the Act has been mixed. While Biden called it a “momentous day for justice and fairness in the workplace,” some defenders have argued that arbitration is a faster and more cost effective method for resolving disputes rather than clog up the courtrooms. Senator Kirsten Gillibrand, D-N.Y. and Senator Lindsey Graham, R-S.C. introduced the bill in 2017 in order to combat sexual harassment and misconduct in the workplace.

Employers should continue to ensure their mandatory arbitration agreements comply with the Act and exclude pre-dispute claims involving sexual harassment and sexual assault. Additionally, employers may consider implementing a policy for requesting arbitration for sexual harassment and sexual assault disputes after such a dispute arises. The Biden administration has discussed extending this Act also to non-sexual harassment claims, such as race or gender claims. While that has not made its way yet into legislation, employers should be aware of potential future changes to come.

If you have questions about this new law and how it may affect your business, please contact: