On March 3, 2022, the President signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“Act”). The new law amends the Federal Arbitration Act to prohibit the enforceability of mandatory, predispute arbitration agreements and class action waivers of sexual assault and sexual harassment disputes. The passage of the law comes as a major victory for the #MeToo movement. The amendment provides as follows:
- Makes voidable, at the election of the plaintiff, any predispute mandatory, arbitration agreement or joint-action waiver of conduct constituting sexual assault or sexual harassment;
- Requires courts, not arbitrators, to determine the validity and enforceability of an agreement to arbitrate regardless of any delegation clause contained in the arbitration agreement;
- Defines Sexual Assault Dispute to include 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. - Defines Sexual Harassment Dispute to mean a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.
- The law takes effect immediately and applies to any claims made after the effective date.
- The law does not affect predispute arbitration and class action waivers outside the sexual assault/discrimination context, nor does it address waivers of jury trial that are enforceable in many states including Texas.
The new law raises questions that will have to be answered by the Courts such as what about disputes that include sexual assault/harassment claims along with other claims not covered by the Act? Will courts sever out the sexual assault/harassment claims and retain jurisdiction while sending the other claims to arbitration?
Employers using mandatory arbitration or class action waivers with their workforce (or are considering doing so) should have their existing policies and arbitration agreements reviewed to determine whether they need to make any changes to account for the Act.