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President Biden Signs New Law Banning Mandatory Arbitration of Sexual Harassment Claims

March 24, 2022

On March 3, 2022, President Biden signed into law H.R.4445 – the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“the Act”), passed by the House on February 7, 2022 and the Senate on February 10, 2022. Viewed as landmark legislation arising out of the #MeToo movement, the Act, which became effective immediately upon signing, prohibits employers from requiring mandatory arbitration of workplace sexual harassment or sexual assault claims. In particular, the Act amends the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”) to make any predispute arbitration agreements pertaining to sexual assault or sexual harassment claims under federal, state, or tribal law invalid and unenforceable. Likewise, the Act also bars “predispute joint-action waivers” that prohibit any party from participating in a joint, class, or collective action of sexual harassment or sexual assault claims.

The Act defines “predispute arbitration agreement” as “any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement.” Therefore, employers and employees (or other parties that may enter into an agreement with the employer, such as independent contractors) are still permitted under the Act to agree to arbitrate a sexual harassment or assault claim after the incident(s) giving rise to the claim occurs. Moreover, employees are free to choose on their own to arbitrate their sexual harassment or assault claims, if they prefer not to litigate in court.

Additionally, the Act also provides that any issue as to whether it applies to a dispute shall be determined under federal law by a court rather than an arbitrator. It is important to note that the provisions of the Act will not apply to already-filed or pending claims of sexual harassment or assault but will apply to any dispute or claim that arises or accrues on or after the date of the Act’s enactment.

Since the Act only prohibits mandatory arbitration of sexual harassment and sexual assault claims, employers may continue to enter into predispute agreements requiring employees to arbitrate other types of discrimination and retaliation claims. However, it remains unclear whether employees with hybrid discrimination actions, that include sexual harassment or assault among other claims, will be compelled to arbitrate their non-sexual harassment or assault claims per the agreement or whether courts will allow all claims to proceed as part of one case.

Employers should carefully review any current predispute arbitration agreements they may have with employees or other parties and ensure that they no longer require arbitration of sexual harassment or sexual assault claims. Further, employers who have previously included mandatory arbitration clauses in already effective predispute agreements should consult with employment counsel to better understand how this new law will affect those agreements moving forward.  

Please feel free to reach out to any of our attorneys if you have any questions or would like our assistance in complying with this new federal legislation.  

NOTICE: Material provided on this website has been prepared by Kauff McGuire & Margolis LLP solely for general informational purposes, and it is not intended to and does not constitute legal advice. Material provided on the website is not privileged and does not create an attorney-client relationship with the Firm or any of its lawyers.