On March 3, 2022, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “Act”) into law. The Act was co-sponsored by a bipartisan coalition of senators and representatives in response to the #MeToo movement.
The Act amends the Federal Arbitration Act to explicitly carve out most sexual assault and sexual harassment claims and applies to all pre-dispute arbitration clauses. Employers are prohibited from requiring employees to arbitrate cases relating to claims of sexual harassment or sexual assault. It will also invalidate pre-dispute agreements that waive an employee’s right to participate in a joint, class or collective action in court, arbitration or any other forum that relates to a sexual assault or sexual harassment dispute. Moreover, if a dispute arises about whether a particular claim qualifies as a “sexual assault dispute” or “sexual harassment dispute,” then a court, not an arbitrator, is to answer that question, even if a contractual term exists to the contrary.
The Act is effective immediately and applies to disputes or claims arising or accruing on or after March 3, 2022.
In some ways, the Act’s scope is limited. First, it applies only to claims of sexual assault and sexual harassment and does not extend to other claims of discrimination (such as alleged discrimination based on race, age, religion or national origin). The law also applies only to claims brought under federal or state laws proscribing harassment, and does not appear to cover claims under local laws.
The legislation applies to “pre-dispute” arbitration provisions (i.e., contractual provisions entered into before the occurrence of the alleged harassment) and does not apply to an employee’s agreement to arbitrate reached after a dispute arises. Alleged victims can choose whether to arbitrate their claims or instead proceed to court. The employee’s decision whether to arbitrate or proceed to court will ultimately control.
The potential impact of the new legislation is substantial. The American Bar Association has reported that more than one-half of all workers are now subject to mandatory arbitration as a non-negotiable term of their employment, with that percentage rising to almost two-thirds of employers with 1,000 or more more employees. According to EEOC data, sexual harassment charge receipts account for approximately ten percent of total charges received by the agency.
Employers with employment arbitration provisions that include a requirement to arbitrate sexual harassment and/or sexual assault claims should revisit and amend their arbitration agreements to comply with the Act.
For questions about effects and compliance with the new Act, contact the employment lawyers at Clouse Brown PLLC.