On March 3, 2022, President Biden signed into law the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (the “Act”). The Act, which takes effect immediately, amends the Federal Arbitration Act (the “FAA”) by narrowing both its scope and applicability. Specifically, the Act prohibits employers from forcing employees to settle sexual misconduct claims in closed-door arbitration venues.
Before the Act, many sexual harassment claims were resolved confidentially under pre-dispute arbitration agreements that employees were required to sign as a condition of employment. Although the Act does not ban arbitration of sexual assault and harassment claims, it prohibits employers from mandating that employees agree to arbitrate such disputes. The Act also bars pre-dispute joint or class action waivers in connection with sexual assault and harassment claims. Interestingly, the Act does not just apply to claims of sexual harassment arising under federal law (i.e., Title VII), but it applies to such claims brought under state or tribal law. As a result, small employers that would not be covered under federal law would still be subject to the Act for claims raised under state law. The Act is one of many legislative changes arising from the #MeToo movement and is intended to shed light on incidents of sexual misconduct in the workplace.
Now, employees with claims of sexual misconduct may choose to file lawsuits against their employers and alleged perpetrators in a public forum rather than submitting their claims to private arbitration. Employees asserting sexual assault or sexual harassment claims may bring such claims in court, either as an individual or part of a class action. Employees may still opt to resolve their claims in arbitration but cannot be forced to do so, regardless of whether they previously entered into an arbitration agreement.
This Act has significant impact for employers who rely on arbitration agreements as a tool to efficiently resolve employee disputes, and as protection against high jury verdicts. While arbitration agreements regarding other types of claims remain enforceable, existing arbitration agreements will not prevent employees from bringing forth claims of sexual misconduct in court. Accordingly, employers should review and revise any mandatory arbitration provisions in their employment-related agreements. This includes employee handbooks, offer letters, waivers and contracts. Murtha Cullina’s Labor & Employment Group is available to assist in addressing questions regarding these and other issues.