President Biden Signs Bill Ending Forced Arbitration of Sexual Assault and Sexual Harassment in the Workplace
On March 3, President Biden signed H.R. 4445 “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” The bipartisan bill amends the Federal Arbitration Act (FAA) to permit an employee alleging sexual assault or harassment to invalidate a pre-dispute arbitration agreement or joint-action waiver. Such arbitration agreements are typically found in employment agreements.
§402 details that “at 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 join-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.”
Plainly, if an employee signs an agreement to arbitrate employment-related claims at the onset of or during employment and later experiences sexual harassment or assault, the employee can choose to pursue his or her claims in court rather than through arbitration. Additionally, if an employee signs an agreement to pursue his or her claims only individually, and not as a member of a class action lawsuit, the employee may elect to dispense with that agreement and pursue claims on a joint basis with other alleged victims. The discretion to waive the agreement rests solely on the employee. The legislation also requires that courts, rather than arbitrators, determine whether H.R. 4445 applies to a given claim, even if the agreement at issue delegates that authority to an arbitrator. This is a considerable departure from U.S. Supreme Court precedent holding that under the FAA, parties to arbitration agreements could delegate the decision of whether a claim is arbitrable to the arbitrator.
The FAA amendment applies “to any dispute or claim that arises or accrues on or after the date of enactment.” Thus, while the bill could invalidate pre-dispute agreements entered prior to its enactment, it would not affect disputes that began prior to the bill’s enactment.
The practical effect is that employers will no longer be able to keep sexual assault and sexual harassment claims out of court through mandatory arbitration and should take action to update any arbitration agreements to comply with the legislative exception relating to sexual assault or sexual harassment claims. Employers should further prepare for any existing sexual assault or sexual harassment claims currently in arbitration to be moved to the courts if the employee so chooses.
Our Labor or Employment attorneys are available to assist in addressing any questions you may have regarding these developments. To learn more about these issues, please contact the Mansour Gavin lawyer with whom you usually work or any member of the firm’s Labor or Employment group.