Simple answer – nope! On February 10, 2022, inspired by the #MeToo movement, the U.S. Senate passed H.R. 4445, an amendment to the Federal Arbitration Act (“FAA”), also known as the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” I guess the acronym would be “EFASASHA,” but that looks kind of silly, so I’ll refer to it as the “Act.” President Biden signed this bill into law on March 3, 2022.
If your employees have signed pre-dispute arbitration agreements (e.g., as part of a contract or offer letter), they can no longer be forced to arbitrate cases involving sexual harassment or sexual assault. The Act also prohibits employers from requiring employees to sign agreements waiving their right to bring sexual harassment/sexual assault claims jointly or on a class basis.
The Act defines the term “sexual assault dispute” as a “dispute involving a nonconsensual sexual act or sexual contact . . . including when the victim lacks capacity to consent.” The Act defines “sexual harassment dispute” as a “dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.”
Summary of Legislation
The Act amends the FAA as follows:
- All predispute arbitration and class action waivers are unenforceable in cases alleging sexual harassment or sexual assault. However, an employee who signs a predispute arbitration agreement can still elect to arbitrate a sexual harassment or sexual assault dispute if that person so chooses. Employees may prefer for privacy or other reasons to arbitrate such claims rather than pursue them in court.
- A class arbitration waiver would not be enforceable in a class action involving sexual harassment or sexual assault.
- If a party to a dispute challenges whether the Act applies to the dispute, that issue will be determined by a court applying Federal law.
- If a party disputes whether the Act applies to a particular arbitration agreement, or whether an arbitration agreement is enforceable, that issue will be decided by a court and not an arbitrator, regardless of any language in the agreement electing otherwise.
- The Act will apply only to claims that arise or accrue on or after March 3, 2022, and it will not apply retroactively.
It remains to be seen how a court will interpret certain provisions in the new legislation. For example, the Act applies to “a case” relating to sexual harassment or sexual assault filed under any federal, state, or tribal law. The use of the term “case” rather than “claim” leaves unclear how courts will handle litigation that also includes other claims, like wage-and-hour claims or a disability discrimination claim. Will all claims remain in court or will the non-harassment/non-assault cases go to arbitration? Employers having to defend against claims from the same employee in two different forums could prove to be costly.
Employers that have existing predispute arbitration agreements or class action waivers should consult with experienced employment counsel to determine whether they need to be amended to carve out sexual harassment and sexual assault disputes. Employers likely will see an increase in cases alleging sexual harassment, as plaintiffs seek to litigate such claims before juries in the hopes of larger or more public verdicts. We will continue to monitor expected litigation involving the Act, which we hope will provide some clarity regarding its scope and application.
Final Thought- Isn’t it a pleasure to read an article that has nothing to do with COVID?!