On March 3, 2022, President Biden signed into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (H.R. 4445, the “Act”), which amends the Federal Arbitration Act and ensures that victims of sexual assault and harassment are entitled to have their day in court. Specifically, the Act provides that no person may bind a victim-complainant to pre-dispute arbitration agreements or claim waivers, including class claim waivers, covering instances of sexual assault or sexual harassment. The Act defines “sexual assault” as any dispute involving nonconsensual sexual acts or conduct and “sexual harassment” as conduct that constitutes sexual harassment under any federal, state or local law.
The Act will not only invalidate all pre-dispute arbitration agreements and class or claim waivers covering any claim of sexual assault or sexual harassment, including any agreements that currently exist, but will also apply to a dispute or claim that arises or accrues after the date it becomes law. The Act delegates to the courts, and not to arbitrators, the duty of deciding whether an arbitration agreement relating to a claim of sexual harassment or assault is enforceable and valid.
The Act does raise some uncertainty, including whether a plaintiff’s entire case or just claims of sexual assault or harassment must be excluded from arbitration. Courts will have the opportunity to clarify such uncertainty over time.
What does this mean for employers?
As such, the Act affects all existing arbitration agreements, claim waivers, and class action waivers to the extent that such agreements may include claims of sexual assault or sexual harassment. The Act does not affect arbitration agreements or class or claim waivers entered into after the instances of alleged harassment or assault occur as part of a settlement or otherwise.
Employers should review their arbitration agreements and claim waivers in any contract—including those with employees, contractors, vendors, patients, customers, etc.—to determine whether the agreement might cover a claim of sexual assault or harassment.
Employers should discuss with legal counsel whether to expressly remove sexual assault and harassment claims from their arbitration agreements. State law prohibitions on mandatory arbitration agreements and settlement agreements may play a role in an employer’s decisions regarding its arbitration agreement.
The Act passed the U.S. House of Representatives by 335-97 on February 7, 2022, and the U.S. Senate by voice vote on February 10, 2022. The Act goes into effect immediately and will apply to disputes that arise beginning March 3, 2022.
Attorneys at Dickinson Wright are available if you have any questions or concerns about your company’s arbitration agreements and employment policies. Please contact us for more information.
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