A Capehart Scatchard Blog

Congress Passes Groundbreaking Bill Restricting Mandatory Arbitration in Sexual Harassment Cases

By on February 25, 2022 in Employee Rights with 0 Comments

A few weeks ago, Congress passed a groundbreaking bipartisan bill that greatly restricts when employers can enforce pre-dispute arbitration agreements regarding workplace sexual assault and harassment claims. The bill is expected to be signed into law by President Biden in the very near future.

Inspired by the #MeToo movement, The Ending Forced Arbitration of Sexual Assault Act of 2021 amends the Federal Arbitration Act (“FAA”) by allowing an employee alleging sexual assault or sexual harassment to invalidate a pre-dispute arbitration agreement or joint-action waiver. What this means is that if an employee previously signed an agreement to arbitrate employment-related claims and later is a victim of alleged sexual assault or harassment, the employee can reject the arbitration agreement and decide to pursue his or her claims in court. Similarly, where an employee agreed to pursue claims in an individual capacity only, and not through a class action, the employee may also ignore that agreement as well and pursue such claims on a joint basis with other alleged victims.

Under this bill, while employees are given the option to negate a prior agreement, those signing such a pre-dispute arbitration or joint-action waiver agreement may nevertheless still opt to arbitrate such claims if they so choose. But, now, significantly that decision rests exclusively with the employee. The legislation also explicitly requires that courts, not arbitrators, decide whether this arbitration preclusion law applies to a given claim, regardless of whether the agreement itself vests that authority with the arbitrator, further showing a preference for court involvement in deciding such disputed preliminary jurisdictional issues.

In terms of its legal scope, the bill covers all claims of sexual assault or harassment, whether they arise under federal, state, local, or tribal law. “Sexual assault” is defined as a nonconsensual sexual act or sexual contact, as such terms are defined in Section 2246 of Title 18 (the U.S. criminal code) or similar applicable Tribal or State law, including when the victim lacks capacity to consent. “Sexual harassment” is defined as “conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law”—meaning that this covers anything that would qualify as sexual harassment under Title VII of the Civil Rights Act of 1964 (“Title VII”), and in New Jersey, conduct that would qualify as sexual harassment under the New Jersey Law Against Discrimination (“LAD”).

One positive for employers is that the bill explicitly states that it does not apply retroactively, and only applies “to any dispute or claim that arises or accrues on or after the date of enactment.”  Given the broad scope of this bill’s coverage, it will still likely invalidate pre-dispute agreements entered into prior to its enactment. Moreover, given some of the vague terms included in the bill, it will also be interesting seeing how courts will interpret those terms and whether any procedural rules will be adopted for how an employee is to invoke these negation of agreement rights. Moving forward, now is the time for employers to start reviewing and immediately evaluating their employee agreements to determine the impact of this expected new law and how it will affect what the employer may be able do in defending future sexual harassment and sexual assault cases.  This current revision to the scope of mandated arbitration may just be the start of other future legal changes in this area. In a Statement of Administration Policy issued on February 1, 2022, White House officials indicated that this bill could be a precursor for addressing forced arbitration of other employment claims “including arbitration of claims regarding discrimination on the basis of race, wage theft, and unfair labor practices.” So, employers should continue to monitor this hot topic to assess whether further legislative measures are potentially down the road to effectuate changes in forced arbitration of those claims as well.


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About the Author

About the Author:

Mr. Smith is Co-Chair of Capehart Scatchard's Labor & Employment Group. He practices in employment litigation and preventative employment practices, including counseling employers on the creation of employment policies, non-compete and trade secret agreements, and training employers to avoid employment-related litigation. He represents both companies and individuals in related complex commercial litigation before federal states courts and administrative agencies in labor and employment cases including race, gender, age, national origin, disability and workplace harassment and discrimination matters, wage-and-hour disputes, restrictive covenants, grievances, arbitrations, drug testing, and employment related contract issues.


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