Takeaways

The Federal Arbitration Act is amended to invalidate pre-dispute arbitration agreements as to sexual harassment and/or sexual assault claims. This law allows persons alleging harassment or sexual assault the freedom to decide which legal path to pursue for possible recourse, whether it be arbitration or in a court of law, after the dispute arises.
If an employee files a sexual harassment and/or sexual assault claim in a court of law, the court, not an arbitrator, will determine whether the claims are subject to a previous arbitration agreement.
This federal law not only applies to individual plaintiffs, but also to sexual harassment and sexual assault claims brought in joint, class or collective actions.

On March 3, 2022, President Biden signed HR 4445, also known as the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021,” into law, and it went into effect immediately. The Act, which is described more fully below, is consistent with President Biden’s “Agenda for Women,” wherein the Biden administration stated its determination to “end [] [] forms of workplace discrimination and harassment,” and end violence (including sexual assault) against women. Thus, although the Act is currently limited to sexual harassment and assault, the Biden administration will likely be looking to take action on other forms of discrimination and unfair employment practices in the future.

Proponents of the Act have stated that its purpose is to “give survivors their day in court,” and “allow them to discuss their cases publicly”—even if they had previously signed arbitration agreements that would bar public litigation of their claims. Typically, cases in arbitration do not become public, whereas court cases tend to put employers and companies in the public eye.

The Act amends Title 9 of the United States Code (or the Federal Arbitration Act) and invalidates “predispute” arbitration agreements that preclude a party from filing a lawsuit in a court of law regarding sexual harassment or sexual assault. The forum (court verses arbitration) is “at the election of the person” alleging such conduct, or the named representative of a class or collective action alleging such conduct.

Pursuant to the Act, no arbitration agreement that was entered into prior to the dispute (alleging sexual harassment or sexual assault) shall be valid or enforceable with respect to a case filed under federal, tribal or state law. Further, the Act applies “to any dispute or claim that arises or accrues on or after the date of enactment of this Act.”

While the law appears straightforward, the scope of exactly what claims will be covered is unclear. We anticipate litigation regarding what claims constitute “harassment claims” under the Act. For example, if a former employee brings a claim of retaliation, this retaliation claim could be viewed as either ongoing harassment, or it may be viewed as entirely separate from the underlying harassment claim. It is also unclear under the Act what will occur if an employee asserts multiple causes of action, only one of which is sexual harassment and/or assault. In this instance, it is unclear which forum will be determinative, and whether non-harassment claims might be swept into an arbitration.

Of note, a nearly identical bill (S. 2342, or the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021”) is expected to come up for a vote on the Senate floor within the coming days. This bill has a more specific, lengthy definition of what constitutes a “sexual harassment dispute,” but it is otherwise virtually identical to the Act.

Going forward, employers should update predispute arbitration agreements to ensure such agreements exclude sexual harassment and sexual assault claims brought under federal, tribal or state law. The law does not require employers to proactively modify past arbitration agreements; they will simply be deemed unenforceable with respect to sexual assault and sexual harassment claims. Nonetheless, including claims that cannot be legally subject to a predispute agreements could raise arguments that the arbitration agreement is overreaching, so future agreements should be modified.

Regardless, with the passing of the Act, employers nationwide should prepare themselves for an increase in litigation and public exposure regarding employees’ claims of sexual harassment and sexual assault. Employers should ensure that their sexual harassment policies, training, and other harassment prevention efforts are up to date and subject to strict enforcement.

We will continue to provide updates on this topic when they become available.

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