On March 3, 2022, President Joe Biden signed into law new legislation banning the use of arbitration clauses in employment contracts that force victims of sexual assault and harassment to pursue their claims in private arbitration rather than in open court. The legislation passed Congress with bipartisan support and has been described as one of the most significant workplace reforms in history. It is estimated that about 60 million Americans are subject to arbitration clauses.
The law allows victims of sexual assault and harassment to have their day in court and to speak publicly about their cases. Until now, victims who had signed an arbitration agreement with their employers were forced to bring their claims in a private and largely employer-friendly arbitration process, where cases are typically decided by a single arbitrator instead of a jury.
- What is the new law called?
- The law amends Title 9 of the United States Code pertaining to arbitration and is called “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.”
- What disputes does the law apply to?
- It applies to sexual assault and sexual harassment disputes.
- Does the law apply to arbitration agreements that have been signed prior to the law’s enactment?
- Yes. The law applies retroactively to all existing arbitration agreements, even to those agreements signed before the law was enacted.
- Does the law apply to preexisting disputes?
- No. It only applies to disputes that arise on or after March 3, 2022.
- Which types of agreements does the law apply to?
- The law only applies to predispute arbitration agreements. Those are agreements that were signed before the alleged sexual harassment or assault takes place.
- What does the term “sexual assault dispute” mean?
- The law defines sexual assault dispute as a dispute involving a nonconsensual sexual act or sexual contact as such terms are defined by Federal law or any Tribal or State law, including when the victim lacks capacity to consent.
- What does the term “sexual harassment dispute” mean?
- The law defines sexual harassment dispute as a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.
- What if the victim of harassment or assault had signed a predispute arbitration agreement, but still wants to pursue his or her case in arbitration?
- The law does not automatically invalidate a predispute arbitration agreement. Rather, it gives the victim of harassment or assault the option to “elect” to invalidate the agreement. Of course, the law only invalidates predispute agreements that were signed before the dispute arises, so the parties can freely agree to arbitrate the claims after those claims arise.
- Does the law also ban arbitration of sexual harassment or assault cases under state law?
- Yes. Although it is a federal law, it expressly bans predispute arbitration agreements with respect to claims arising under any federal, state, or tribal law.
- What if the victim has other claims in addition to a sexual harassment or assault claim? Do these claims stay in court or go to arbitration?
- This will likely be the most heavily litigated issue for a few years to come. The law says no predispute arbitration agreement “shall be valid or enforceable with respect to a case [that] relates to the sexual assault dispute or the sexual harassment dispute.” Courts will likely need to interpret what the word “case” and phrase “relates to” mean. A possible interpretation could be that the ban on arbitration applies to an entire legal action (all claims), as long as the action relates to a sexual harassment or assault dispute. In other words, if a plaintiff has a retaliation claim for reporting sexual harassment, it would be very likely that the retaliation claim can still proceed in court with the sexual harassment claim despite the existence of an arbitration agreement.
- Who gets to decide if a dispute is covered under the law?
- The law authorizes only the courts to determine if a certain dispute falls within the law’s applicability. This means an arbitrator cannot make such a determination, even if the arbitration agreement itself delegates such a determination to the arbitrator.
- Is there anything else the law bans?
- Yes. The law also makes invalid any predispute agreement in which the victim of sexual harassment or assault agrees to waive his or her right to participate in a joint, class, or collective action in any forum.