On March 3, 2022, President Biden signed the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (the “Bill”) into law, effectively banning the enforcement of pre-dispute forced arbitration agreements and joint, collective or class action waivers of sexual harassment and sexual assault claims.
Regarded as a response to the “Me Too” movement against sexual assault and sexual harassment, the Bill, which amended the Federal Arbitration Act, had broad bipartisan support in Congress, including unanimous support in the Senate. The Bill empowers the person bringing the claim of sexual harassment or assault or representing a class or collective action with such claim to decide whether to litigate the claim in court or in arbitration. Specifically, the Bill provides:
[A]t the election of the person alleging conduct constituting a sexual harassment dispute or 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.
After President Biden signed off on the Bill on March 3, 2022, it took immediate effect.
Because the Bill only bans enforcement of “predispute” arbitration agreements, it does not prohibit enforcement of agreements to arbitrate where a dispute concerning sexual harassment and/or assault already exists between the parties. Where there is a question of the law’s applicability, the Bill expressly provides that a Court, rather than an arbitrator, must make the decision, regardless of any agreement of the parties to the contrary.
Though there have been several significant wins for companies with respect to arbitration in the courts in recent years, the enactment of the Bill suggests Congress’s potential interest in limiting the enforceability of arbitration agreements through legislation in other areas. For now, the Bill does not alter any existing rights to enforce arbitration agreements with respect to claims of discrimination and/or harassment on other basis, such as race, religion, or national origin.
Here’s what Companies need to know:
- Companies can no longer obligate employees to arbitrate claims of sexual harassment and sexual assault.
- Companies should review arbitration provisions in their existing agreements in light of this significant change and pay special attention to employment-related agreements, including offer letters, employment contracts, and/or severance or separation agreements.
Please contact a member of Herrick’s Employment Group with any questions.
Carol M. Goodman at +1 212 592 1465 or cgoodman@herrick.com
Jalise Burt at +1 212 592 1590 or jburt@herrick.com
Meaghan Roe at +1 212 592 1632 or mroe@herrick.com
