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Nationwide Ban against the Enforcement of Mandatory Arbitration Agreements in Sexual Assault and Sexual Harassment Cases Awaits President Biden’s Signature

2022-03-01

The White House supports this broad reaching bill that renders any pre-dispute agreement unenforceable with respect to any sexual misconduct claims

On February 10, 2022, the Senate passed S. 2342, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.  On February 7, 2022, the House of Representatives passed the bill, H.R. 4445, by a vote of 335 to 97 and it is expected to be signed into law by President Biden soon.

Even though many states have passed similar legislation prohibiting mandatory arbitration provisions of sexual misconduct claims, they were subject to preemption under the Federal Arbitration Act (FAA) which provides that arbitration agreements “shall be valid, irrevocable, and enforceable” unless they are the product of fraud.  The federal act is not subject to any such preemption defense.

The bill renders any pre-dispute arbitration or employment agreement unenforceable with respect to sexual assault and/or sexual harassment claims that requires employees to arbitrate disputes involving nonconsensual and/or unwanted sexual acts or contact, advances, physical contact that is sexual in nature, sexual attention, sexual comments and propositions for sexual activity, conditioning employment benefits on sexual activity, or retaliation for rejecting unwanted sexual attention. 

The bill has broad reach and will cover such conduct regardless of whether the claims arise under federal, state, local or tribal law.  It will also explicitly require courts, rather than arbitrators, to determine the applicability of the bill to a given arbitration or employment agreement and the validity and enforceability of any agreement to which the bill applies. 

The bill does not forbid arbitration on other claims between employers and employees; however, they will need the employee’s consent to arbitrate a claim of sexual misconduct.  Under the Act, the decision whether to arbitrate a sexual misconduct claim or to litigate it in court rests entirely with the employee. 

Assuming that the bill is passed, employers may continue to use mandatory arbitration agreements even if they address sexual harassment and/or sexual assault claims if they do not enforce the agreement if the employee raises a sexual misconduct claim and chooses to litigate in court.  However, to be safe, employers may want to revise their existing arbitration agreements to exempt sexual misconduct especially if they are in a state with similar restrictions.

The foregoing has been prepared for the general information of clients and friends of Workplace Dynamics LLC and is not being represented as being all-inclusive or complete. It has been abridged from legislation, administrative ruling, agency directives, and other information provided by the government. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel.