Many employers require their workers to sign arbitration agreements at the outset of employment, and it’s no wonder why. These agreements allow employers to require arbitration of many employment-related disputes, rather than participate in lengthy, expensive lawsuits.
On February 10, 2022, the United States Senate passed a bill that will prohibit this practice with respect to claims of sexual assault or sexual harassment in the workplace. The bill, known as the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, was passed by the House of Representatives on February 7, and now heads to President Biden’s desk for signature. Prior to its passage in Congress, the President expressed support for the measure and he is expected to sign it into law.
The bill amends the Federal Arbitration Act for disputes involving sexual assault and sexual harassment in order to stop employers and businesses from forcing employees and customers out of the court system and into arbitration. Under the law, employees who file claims of workplace sexual harassment or sexual assault are no longer bound by agreements compelling them to arbitrate. Instead, they can choose whether to pursue their claims in court or arbitrate the matter under the arbitration agreement. This option is available regardless of whether the claims are brought under federal, tribal, or state law.
As its name implies, the Act applies only to claims of sexual assault and sexual harassment. Employers will still be able to compel arbitration under agreements with employees for claims involving other forms of workplace harassment. Employers can still enforce arbitration agreements as to claims of sex-based disparate treatment.
With the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 set to become law, employers and businesses that use arbitration agreements should take note and plan accordingly. Those agreements no longer guarantee that sexual harassment and sexual assault claims can be forced into arbitration.