Employment Law Alert

  
 

Sexual Assault and Sexual Harassment Claims No Longer Subject To Mandatory Arbitration Provisions

On February 10, 2022, the United States Senate passed H.R. 4445 (the “Bill”), otherwise known as the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “Act”). The Act was passed by voice vote, days after the United States House of Representatives passed the Bill by a vote of 335 to 97. The Bill, which received bipartisan support from both chambers of Congress, was signed into law by President Biden on March 3, 2022. The Act amended the Federal Arbitration Act, Title 9 of the United States Code, to prohibit mandatory enforcement of any predispute arbitration agreement covering claims or disputes involving “sexual harassment” or “sexual assault,” as well as waivers of the right to bring such claims either jointly or as a class or collective action.

Key Definitions
The Act contains the following four, crucial definitions:

(1) PREDISPUTE ARBITRATION AGREEMENT.—The term ‘predispute arbitration agreement’ means any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement.

(2) PREDISPUTE JOINT-ACTION WAIVER.—The term ‘predispute joint-action waiver’ means an agreement, whether or not part of a predispute arbitration agreement, that would prohibit, or waive the right of, one of the parties to the agreement to participate in a joint, class, or collective action in a judicial, arbitral, administrative, or other forum, concerning a dispute that has not yet arisen at the time of the making of the agreement.

(3) SEXUAL ASSAULT DISPUTE.—The term ‘sexual assault dispute’ means a dispute involving a nonconsensual sexual act or sexual contact, as such terms are defined in section 2246 of title 18 or similar applicable Tribal or State law, including when the victim lacks capacity to consent.

(4) SEXUAL HARASSMENT DISPUTE.—The term ‘sexual harassment dispute’ means a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.

Prohibitory Provisions and Application

The Act effectively nullifies all predispute arbitration agreements with respect to claims involving sexual assault or sexual harassment:

Notwithstanding any other provision of this title, at the election of the person alleging conduct constituting a sexual harassment dispute or 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.

Significantly, the Act further provides that courts, not arbitrators, must determine whether a claim qualifies as a sexual harassment or sexual assault claim under the Act. This is true even if the arbitration agreement in question “purports to delegate such determinations to an arbitrator.”

On its face, the Act does not apply to pending disputes: “This Act, and the amendments made by this Act, shall apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act.” However, this language supports the notion that an arbitration agreement entered before the enactment of the Act may be nullified by the Act if the “dispute or claim” arises after the enactment date.

A Word of Caution

There has never been a better time for employers to take a moment to review arbitration provisions in employment agreements. Indeed, arbitration provisions should include an exception for any claims that are non-arbitrable under federal law. A better practice, however, may be to expressly exclude “sexual harassment” or “sexual assault” claims from arbitration.

The Act may lead to employers fighting battles on two fronts, i.e., litigating sexual harassment and/or sexual assault claims in court and other employment-related claims in arbitration. Nonetheless, updating arbitration provisions to account for the changes made by the Act will help ensure the enforceability of those provisions with respect to arbitrable claims.