New Law Aims to End Forced Arbitration of Sexual Assault and Harassment Claims

By: Lexy G. Holland

Employees who would have previously been required to arbitrate claims of sexual assault or harassment will be able to bring those claims to court under a new bill passed by both houses of Congress. It is expected to be signed into law by President Joe Biden soon.

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021(“the Act”) will amend the Federal Arbitration Act (“FAA”). The FAA provides that a written arbitration agreement is binding and enforceable, unless the agreement or arbitration provision is found invalid under principles of state contract law.

Under the Act, an employee alleges “conduct constituting a sexual harassment dispute or a sexual assault dispute,” or is the “named representative of a class or in a collective action alleging such conduct,” he would not be forced to arbitrate the claim pursuant to the FAA. The Act provides specific definitions for sexual assault and sexual harassment disputes. A trial court, rather than an arbitrator, would determine if a claim may be excluded under the Act.

Employers should know that the Act is not retroactive, meaning it only applies to sexual assault and harassment claims that “arise” after it is enacted. This requirement will almost certainly be the subject of future litigation, considering the sensitive nature and timing of sexual assault and harassment allegations.

While the Act makes pre-dispute arbitration agreements invalid and unenforceable in this instance, an employer and employee may agree in writing to arbitrate the dispute after it occurs. However, the decision to arbitrate would lie solely in the hands of the employee bringing a sexual assault or harassment claim.

Also, the law does not apply to other types of claims, such as race discrimination or wage-related disputes. It is unclear now how courts and arbitration panels will deal with claims brought by employees alleging both covered and excluded allegations under the Act.

Employers may also want to consider revising arbitration agreements in light of the new law.

Lexy Gross Holland

Lexy Gross Holland is a member of the firm’s Litigation & Dispute Resolution team. She assists with the representation of a broad range of clients in a variety of cases, including appellate practice, constitutional law and commercial litigation. Lexy has experience in handling real estate, construction, equine, energy, zoning and land use matters. As a prior newspaper reporter, Lexy uses her media and communications experience to represent clients in the news industry and to advise... Read More