New Legislation Restricts Arbitration Agreements for Sexual Assault and Sexual Harassment Claims

Congress has just approved legislation aimed at invalidating pre-dispute arbitration agreements and class action waivers involving sexual assault and sexual harassment claims.

Known as the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, (“Act”), this legislation amends the Federal Arbitration Act (FAA) to give employees who are parties to arbitration agreements with their employers the option of bringing their claims of sexual assault or sexual harassment in arbitration or court. In addition, the validity or enforceability of an agreement will now be determined by a court, even if a contractual term dictates otherwise.

Here is what employers need to know:

The Act applies to any case under state, tribal or federal law, relating to sexual assault and harassment claims only. Any other valid arbitration agreements remain valid and can be enforced. Furthermore, the Act does not affect claims that arose or accrued before the Act’s enactment.

Employees who are parties to an arbitration agreement may choose to pursue their sexual assault and harassment claims in arbitration or court. Of note, arbitration is more confidential given there is no public record.

Finally, courts will decide whether claims are subject to arbitration, despite what the agreement says. The new law is also explicit that, with respect to these types of claims, the employee, not employer, may choose whether to go to court or arbitrate.

Employers with arbitration agreements should anticipate more sexual assault and harassment claims to be filed in court and expect more types of claims to be filed in court in the future. The Biden Administration is already seeking to broaden the scope of claims not subject to pre-arbitration agreements.

If your business has any questions about this topic, or any other general employment issues, please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288.