Today, President Joseph R. Biden signed into law H.R. 4445, or the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.
The new law prohibits employers from requiring their employees to resolve sexual harassment and sexual assault claims through private arbitration, except where an employee voluntarily agrees to participate in the arbitration process after their claim arises. Thus, for example, if an employee signs an otherwise enforceable employment agreement with a mandatory arbitration provision upon hire and is later subject to sexual harassment or sexual assault in the workplace, the employee may now elect to pursue resolution of their claims in court instead of through their employer’s arbitration program.
1. When does the law take effect?
The law takes effect immediately upon enactment, which is today.
2. Which claims are no longer bound by pre-dispute arbitration agreements?
At the employee’s election, pre-dispute arbitration agreements (and/or class action waivers) are no longer valid or enforceable with respect to cases filed under federal, tribal or state law that relate to a sexual assault dispute or a sexual harassment dispute. This means that other claims filed in conjunction with an employee’s sexual harassment and sexual assault lawsuit may also escape resolution through private arbitration. The law defines “sexual assault dispute” as a dispute involving a “nonconsensual sexual act or sexual contact.” The law defines “sexual harassment dispute” as a dispute relating to conduct that is alleged to constitute sexual harassment under applicable federal, tribal or state law, including, for example, Title VII of the Civil Rights Act of 1964.
3. What does the law mean for existing arbitration agreements?
The law does not require employers to amend their existing arbitration agreements. However, employers should at minimum review the arbitration provisions in their current agreements and consider making prospective revisions to carve-out any non-arbitrable claims under federal law and/or specifically carve-out out sexual assault and sexual harassment claims.
4. Who decides whether an existing arbitration agreement is enforceable?
A court. If an employee challenges the validity of an arbitration agreement, that dispute will be determined by a court applying federal law, rather than an arbitrator. This is the case even if the agreement states an arbitrator should decide the issue.
5. Are employers and employees still permitted to agree to arbitrate sexual harassment and sexual assault disputes after a claim arises?
Yes. Parties are still permitted to voluntarily choose to arbitrate any claims, including sexual harassment and sexual assault claims, so long as the parties enter into the agreement to arbitrate after the matter arises.
For more information on this topic, or to learn how Godfrey & Kahn can help, contact a member of our Labor, Employment & Immigration Law Practice Group.