On March 3, 2022, the President signed into law a bill called “Ending Forced Arbitration of Sexual Assault and Harassment Act of 2021” (H.R. 4445). As the name suggests, the bill bans forced arbitration of sexual assault and sexual harassment cases, including a bar against waivers of the right to bring such claims jointly and/or on a class basis. The bill passed the House of Representatives on February 7, 2022 and was passed by the Senate on February 10, 2022.
The bill amends the Federal Arbitration Act making pre-dispute arbitration agreements and pre-dispute joint and class action waivers unenforceable at the election of a person (or a named representative of a class action) alleging claim(s) of sexual assault or sexual harassment under federal, state or tribal law. Under the bill, a complainant has a choice whether to go to court or to proceed with their contractual arbitration in cases of sexual assault or harassment.
Per the Biden Administration’s Statement of Administrative Policy, the goal of the bill is to empower survivors of sexual assault and sexual harassment by giving them a choice to bring their claims to the courts instead of a compulsory contractual arbitration. At the signing of the bill on March 3rd, 2022, the Vice President reiterated that the new law is expected to empower survivors of sexual assault and sexual harassment and to make workplaces more safe and more just, especially for women.
Under the new law, the courts, rather than an arbitrator, will determine the validity and enforceability of an arbitration agreement (or a waiver), including whether a claim constitutes a sexual assault or a sexual harassment dispute, irrespective of the agreement’s delegation of such determinations to an arbitrator.
The bill goes into effect upon enactment and will apply to any disputes or claims that arise or accrue on or after the enactment date. By its language, the bill does not appear to be retroactive as to already arisen or accrued claims. However, Senate Majority Leader Chuck Schumer and Vice President Harris call the bill “retroactive” with respect to existing arbitration clauses. It appears that individuals already bound by their existing arbitration clauses prior to the enactment of the bill will have a choice to litigate claims of sexual assault and harassment in courts instead of proceeding with the mandatory arbitration after the enactment of the new law.
In light of the new law, employers and other individuals in industries with widespread use of arbitration clauses, are advised to review and evaluate relevant language in their current arbitration agreements.
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