“Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” Signed Into Law
On Thursday, March 3, 2022, President Biden signed into law the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (the “Act”), following the earlier passage of the Act by both the United States Senate and the House of Representatives. The Act, co-sponsored by bipartisan coalition of senators and representatives, including Senators Gillibrand and Graham, and Representative Bustos, was initially introduced in 2017 in response to the “Me Too” movement.
The Act forbids the application of mandatory arbitration clauses present in employment contracts to cases of sexual assault and sexual harassment, allowing individuals to elect to bring sexual assault and sexual harassment claims in federal, state, or tribal court if they so choose. The Act does not prevent employers from mandating arbitration for cases that do not involve sexual assault and sexual harassment. The Act adopts the definitions of sexual harassment present under the Federal, Tribal, and State laws that apply in the jurisdiction where the employee is located.
The Act voids any mandatory arbitration clauses pertaining to sexual assault and sexual harassment in current employment contracts; the Act also prohibits the inclusion of mandatory arbitration clauses pertaining to sexual assault and sexual harassment in all future employment contracts. Further, the Act invalidates clauses in employment agreements that waive the right to bring a class action alleging sexual assault or sexual harassment. As is the case with arbitration, the Act does not prevent the waiver of the right to bring a class action for claims other than sexual assault or sexual harassment. While employers can no longer mandate arbitration pre-dispute, employers and employees can still agree to arbitrate sexual assault and sexual harassment claims after the events have occurred and claims alleged, as the act only forbids mandatory arbitration and does not prevent an employee from voluntarily electing to arbitrate the allegations.
The result of this Act is that sexual assault and sexual harassment cases may be litigated in courts rather than in arbitration, and therefore allegations and evidence will be public documents rather than confidential. It is currently estimated that 60 million Americans have mandatory arbitration clauses included in their employment contracts.
Employers are advised to review existing and future mandatory arbitration agreements to ensure compliance with law.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.