President Joseph Biden has signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, allowing individuals asserting a claim of sexual harassment or assault to file suit in court despite the existence of a predispute arbitration agreement or class or collective action wager.
H.R. 4445 passed the House of Representatives on February 7 by a vote of 335 to 97 and was approved by the Senate just a few days later on February 10 in a voice vote.
The new law amends the Federal Arbitration Act (FAA) to add the following language:
“[A]t the election of the person alleging conduct constituting a sexual harassment dispute or a 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.”
In addition, the law provides that the validity or enforceability of an arbitration agreement at issue will be decided by a court and not an arbitrator, even if a contractual term to the contrary exists.
Parties may mutually agree to arbitration after a claim has been asserted, however.
The law applies prospectively to disputes or claims that arise or accrue after the effective date of March 3, 2022.
“[T]oday marks an important step in an effort to ban mandatory predispute arbitration clauses that takes the power to choose how to pursue justice away from the worker,” President Biden remarked before signing the bill. “And I’m glad that there was a broad bipartisan support and unanimity in the Senate that … there should never be a forced arbitration clause for sexual harassment and/or assault. … [T]his is, I think, a momentous day for justice and fairness in the workplace. And for those who experience sexual harassment or assault, you’re going to have the right today that you did not have yesterday.”
To read the new law, click here.
Why it matters: Employers should update or amend their arbitration agreements to reflect the new law, which may also result in logistical challenges for lawsuits that include claims of sexual harassment or assault as well as other related employment claims (retaliation, for example).