On Thursday, March 3, 2022, President Biden signed into law H.R. 4445, known as the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.”  This is an important change to the Federal Arbitration Act (FAA) that allows employees alleging sexual assault or sexual harassment claims to file those claims in court and prevents them from being forced to arbitration.

The law gives individuals alleging sexual assault or harassment the right to invalidate any pre-dispute arbitration agreements and class action waiver clauses and proceed in the appropriate court or agency under federal or state law.  The law makes it clear that employees who are parties to an arbitration agreement have the choice of whether to pursue their sexual assault or harassment claims in arbitration or in court, regardless of what the arbitration agreement says.

The law only addresses pre-dispute arbitration agreements involving sexual assault or harassment claims, i.e. arbitration agreements entered into before the sexual assault or harassment occurs.  Thus, an employee may still enter into an arbitration agreement after the alleged sexual assault or harassment occurs that forces the employee to arbitrate such claims.

The scope of the law is limited to claims of sexual assault and harassment.  It does not affect arbitration agreements that are enforceable with respect to other types of claims, such as age, race, and disability claims.  As written, it is unclear whether non-sexual assault or harassment claims may be severed from sexual assault or harassment claims and allowed to proceed in arbitration when both types of claims are alleged against an employer.  Due to the ambiguous language of the statute, there will likely be litigation over the scope of the law and the procedure for addressing other types of arbitrable employment claims.

The amendment’s provisions apply with respect to a dispute or claim that arises or accrues on or after the date of enactment of the Act.  As a result, the new law will apply retroactively to arbitration agreements entered into before enactment of H.R. 4445.  Employers should note, however, that employees who are parties to arbitration agreements and who allege sexual assault or harassment claims that arose before the enactment of H.R. 4445 can still be forced to arbitrate such claims.

No immediate change to existing arbitration agreements is required, but employers should consider consulting with employment counsel to revise arbitration agreements that will be presented to future employees.  Additionally, employers with arbitration agreements should anticipate more sexual assault or harassment claims filed by employees seeking to avoid arbitration.

Hill Farrer will continue to monitor developments pertaining to employment arbitration agreements.  Please contact your Hill Farrer attorney or any member of our Labor and Employment department for additional information and assistance with this new law.