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On March 3, 2022, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“Act”) into law. The Act amends federal law by prohibiting enforcement of mandatory arbitration agreements in disputes involving sexual assault and sexual harassment. Employees now have the option of bringing claims of sexual assault or sexual harassment either in arbitration or in court.
The Act amends the Federal Arbitration Act 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.
What Does This Mean For Employers?
- The Act applies to “any dispute or claim that arises or accrues after” March 3, 2022, regardless of the date of the arbitration agreement. This means that if the alleged sexual misconduct occurred prior to March 3, 2022, then employers can still compel arbitration as to those claims, assuming they already entered into a valid arbitration agreement with the employee.
- The Act gives employees the option to invalidate arbitration agreements with respect to sexual assault and sexual harassment claims. This means that an employee who previously signed an arbitration agreement may choose to either arbitrate these claims or pursue them in court regardless of any arbitration agreement they signed. The new law also makes clear that if there is a dispute as to the applicability of the Act, a court, not the arbitrator, must determine whether the dispute is covered under the Act.
- The Act does not affect arbitration agreements for claims that are not related to sexual assault and/or sexual harassment. In effect, a sexual harassment claim may have to be litigated in court, but the other claims (such as discrimination, retaliation, wrongful termination, etc.) potentially could proceed in arbitration pursuant to an arbitration agreement. This could have practical and strategic ramifications, and it remains to be seen how courts will grapple with this issue.
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