FEDERAL LEGISLATION BANS REQUIREMENT THAT EMPLOYEES ARBITRATE SEXUAL HARASSMENT AND SEXUAL ASSAULT CLAIMS
In a rare display of bipartisanship, Congress passed, and President Biden signed, a new law that eliminates pre-dispute mandatory arbitration of sexual harassment and sexual assault claims. On February 7, 2022, the House of Representatives overwhelmingly approved the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (H.R. 4445). It passed the Senate on February 10, 2022, by voice vote without amendment. On March 3, 2022, President Biden signed the bill into law and it took effect immediately.
The new law adds Chapter 4 to the Federal Arbitration Act (“FAA”). The law allows a person alleging conduct constituting a sexual harassment or sexual assault under state or federal law, or the named representative in a class or collective action alleging such conduct, to elect to invalidate a pre-dispute arbitration agreement or joint-action waiver with respect to a case that relates to the sexual harassment or assault dispute.
Importantly, the new law only applies to pre-dispute arbitration agreements and joint-action waivers. It does not impact agreements to arbitrate sexual harassment or assault disputes that parties enter into after a dispute arises. The law does not automatically make void any arbitration provision that include sexual harassment and/or assault claims; it instead allows the plaintiff to choose to invalidate an arbitration agreement for these disputes.
Any issue as to whether the amendment to the FAA applies with respect to a dispute shall be determined under federal law. Moreover, a court, not an arbitrator, shall determine whether the new law applies to a dispute and the validity and enforceability of an agreement to arbitrate that falls within the scope of the new law.
The new law only applies to disputes that arise or accrue on or after March 3, 2022. In other words, the amendment does not apply to conduct constituting sexual harassment or assault that occurred prior to March 3, 2022.
Employers must be aware of this new law and understand the impact it could have on existing arbitration agreements or policies. Because federal and state law governing employment arbitration disputes is often a moving target, employers should regularly consult with an experienced employment law attorney to discuss any existing arbitration agreements, and whether these agreements should be modified for current and/or new employees going forward.To read more articles like this one, subscribe to the ALERT Newsletter today!
About The Author
Tyler Z. Bernstein is an Associate with Sheppard, Mullin, Richter & Hampton LLP in the firm’s Orange County Office. Mr. Bernstein represents employers of all industries in state and federal court. Tyler’s practice extends to the business law context, as he has extensive experience successfully defending against “bet the company” commercial litigations and arbitrations. Tyler regularly defends employers in wage and hour class actions and representative litigations and has extensive experience defending against claims of discrimination, harassment, retaliation, wrongful termination, breaches of contract, and other related matters. Tyler also provides general preventative advice and counseling to employers relating to labor and employment issues.