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The Impact of "Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021" on Employer's Arbitration Provisions
March 31, 2022
On March 3, 2022, President Biden signed into law H.R. 4445, “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” This law amends the Federal Arbitration Act related to arbitration agreements to the extent they require arbitration of sexual assault and sexual harassment claims in employment. For any claims arising after March 3, 2022, employees now have the option to reject these arbitration agreements in favor of bringing claims in court or via a class or collective action.

Other states have enacted similar legislation, including California, Hawaii, New Mexico, New York, Virginia and Washington. For example, Virginia recently enacted a law that prohibits employers from requiring an employee or a prospective employee to execute or renew any provision in a nondisclosure or confidentiality agreement that has the purpose or effect of concealing the details relating to a claim of sexual assault as a condition of employment. Much of this legislation is a consequence of the "Me Too" movement that began in 2017-2018.

Due to the employee's ability to elect between arbitration and court under the Act, arbitration agreements (even of sexual harassment or sexual assault claims) are not per se invalid, and employers need not eliminate such language from their agreement. Employers should, however, take steps to guard against expansive interpretation of the employee's rights under the Act. The Act provides that "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." Employees are likely to argue that "a case" means that all claims, even ones unrelated to sexual harassment or sexual assault, can be removed from arbitration so long as claims related to sexual harassment and/or sexual assault are included. To guard against this risk, employers should consider adding language that addresses how claims under the Act will be dealt with as compared to other claims. To the extent claims are filed in Court, employees may also consider moving to sever claims unrelated to the Act from the litigation.

Employers with questions about this new law, or about implementing mandatory arbitration agreements within their workforce should contact Spilman's Labor and Employment Team.
Labor & Employment Law Carrie H. Grundmann