On Feb. 10, 2022, Congress approved the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “Act”). True to its title, the Act allows new claims of sexual harassment and sexual assault to be filed in court, rather than be subject to pre-dispute mandatory arbitration clauses. Additionally, the law prohibits pre-dispute agreements that waive an employee’s right to participate in a joint, class, or collective action in a judicial, arbitral, administrative, or other forum relating to a sexual assault dispute or sexual harassment dispute.
On March 3, 2022, President Biden signed the Act into law. While doing so, the President said the secrecy of arbitration benefits companies, not victims, and keeps many of those impacted in the blind about an issue that needs more illumination. Further, the Vice President said “Forced arbitration silences survivors of sexual assault and harassment” . . . “It shields predators instead of holding them accountable and gives corporations a powerful tool to hide abuse and misconduct.”
Below, we will briefly review some of the Act’s key elements:
The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021
Despite its lengthy name, the Act is relatively short and straightforward. Basically, it amends the Federal Arbitration Act to make it easier for victims of sexual assault and/or harassment to bring suit in court and not be forced to arbitrate their legal claims. Here is a summary of the main points of the Act:
First, plaintiffs, not defendants, get to choose whether to litigate their sexual assault or harassment claims in court or through arbitration. Individuals are no longer forced to arbitrate and have the right to choose – even if they previously signed an agreement limiting their legal remedies to arbitration only.
Second, regardless of whether the individual signed an agreement waiving their right to collective legal action, individuals may choose to bring suit individually or as a class-action lawsuit.
Third, the Act provides that a federal judge, not an arbitrator, will decide when/if the Act applies to a specific dispute.
Fourth, the Act, in part, applies retroactively. What this means is that any existing forced arbitration clauses or contracts are now voidable, even if the individual signed the forced arbitration agreement before the Act officially became law. However, prior cases that have already been completed through forced arbitration cannot be reopened and litigated in court.
Finally, the Act is not limited exclusively to the area of employment law. It also potentially includes clients, customers, patients, and consumers. This is because many consumer services, like ridesharing apps, often require the user to enter a contract requiring them to arbitrate any legal claims concerning sexual harassment or assault.
Now that the Act has been signed into law, employers should review their mandatory arbitration agreements and class action waivers for any needed revisions, whether legally required or to comply with generally accepted best practices, including direction on what happens when some asserted claims are subject to arbitration and some are not. As employers prepare to comply with the Act they also should note the following:
- The Act took effect immediately and applies to all existing arbitration agreements, even those signed prior to the bill’s enactment; and
- An employer and employee still could agree to arbitrate a sexual assault or sexual harassment dispute after it arises.