President Biden Signs Legislation Banning Mandatory Arbitration of Employee Sexual Harassment and Sexual Assault Claims

This article, originally published February 10, 2022, was revised and updated March 16, 2022.

Yesterday, the U.S. Senate passed H.R. 4445, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (Bill) which amends the Federal Arbitration Act and prohibits the enforcement of forced arbitration clauses in employment agreements for claims of sexual harassment and sexual assault. The bipartisan bill is sponsored by Sen. Lindsay Graham (R-SC) and Sen. Kirsten Gillibrand (D-NY). The legislation now heads to President Biden for signature, who has already expressed his intent to sign the bill into law.

Once the legislation becomes law, employers will be unable to enforce mandatory arbitration clauses against employees that assert claims of sexual harassment and/or sexual assault. The Bill defines sexual assault as a nonconsensual sexual act or sexual contact. The Bill separately defines sexual harassment to include:

Unwelcome sexual advances.
Unwanted physical contact that is sexual in nature.
Unwanted sexual attention, including unwanted sexual comments and propositions for sexual activity.
Conditioning professional, educational, consumer, health care, or long term benefits on sexual activity.
Retaliation for rejecting unwanted sexual attention.

The Bill does not affect the enforcement of arbitration clauses with respect to other types of discrimination claims.

These changes will have far reaching implications for employers. The Biden administration noted more than 60 million Americans are subject to mandatory arbitration clauses in the workplace. Moving forward, employers should reassess their employment agreements and prepare for the likelihood that such claims will no longer be subject to mandatory arbitration. Buchanan’s government relations and labor and employment teams are closely monitoring the legislative and regulatory progress and will continue to keep you informed.

Updated

On March 2, 2022, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021. On March 3, 2022, the Bill became law (Pub. L. 117-90), thereby amending title 9 of the United States Code. See 9 U.S.C. §§ 401-02 (2022). As a result, employers cannot depend on (1) a pre-dispute agreement to mandate employees to arbitrate sexual harassment or sexual assault claims filed under Federal, Tribal, or State law or (2) a pre-dispute joint action waiver to prevent employees from bringing forth or joining a class action alleging the same. Employers should note the new law applies prospectively to claims and/or disputes that arise after March 3, 2022, the date of the law’s enactment. Arbitration agreements or joint action waivers regarding sexual harassment and sexual assault claims that are entered after the dispute arises remain enforceable. As specified by the law, courts, not arbitrators, will determine the law’s applicability when a case is presented.