March 8, 2022 New Federal Law Ends Mandatory Arbitration for Workplace Sexual Harassment Cases
Last week, President Biden signed H.R. 4445, entitled the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (the “Act”). The Act amends the Federal Arbitration Act, to allow a claimant to opt out of an existing pre-dispute arbitration agreement of any case involving a claim of sexual harassment or sexual assault. The Act also applies to joint, class or collective actions involving a claim of sexual harassment or sexual assault. The Act only applies to claims arising after March 3, 2022.
The Act applies to any “case” that “relates to [a] sexual assault dispute or [a] sexual harassment dispute.” Sexual harassment and sexual assault are defined broadly to include any act of sexual harassment or sexual assault under applicable federal or state law. Accordingly, it applies equally to claims based on state law such as California’s Fair Employment and Housing Act or Title VII of the Civil Rights Act of 1964. It is not clear whether the new law will be interpreted to apply to claims of sexual harassment or sexual assault only, all claims in a case that “relate to” sexual harassment or assault, or to all claims in a case that involves sexual harassment or assault regardless of the claim’s relationship to sexual harassment or assault. This is a significant question because it is not uncommon for a complaint alleging sexual harassment to also include claims for employment discrimination based on other grounds (e.g., race, age, disability) or claims for violation of wage and hour or whistleblower laws. The Act specifies that courts, not arbitrators, will answer this question and any other questions about the scope or applicability of the law, even if the arbitration agreement provides that the arbitrator will resolve disputes about arbitrability.
What This Means
For claims arising after March 3, 2022, employees bringing a claim of sexual harassment or sexual assault will be able to proceed in court, regardless of any pre-dispute arbitration agreement they have signed.
Existing arbitration agreements are not automatically rendered void by the Act, and the Act does not prohibit employers from entering into pre-dispute arbitration agreements for claims of sexual assault or sexual harassment. However, it allows the claimant to elect to render the arbitration or class action waiver void and proceed directly to court. Employees may still choose to bring covered claims to arbitration, but they must agree to do so after the dispute arises. Therefore, this new law does not require employers to modify existing arbitration programs.
Employers should note, however, that other laws may restrict their ability to require pre-dispute arbitration of some claims. For example, federal contractors cannot require arbitration agreements regarding sexual harassment and related claims. And in California, A.B. 51, which prohibits employers from requiring mandatory arbitration as a condition of employment, is on hold while the Ninth Circuit Court of Appeals decides whether it will reconsider an earlier panel decision upholding the law.