On February 7, 2022, the United States House of Representatives passed H.R. 4445, which would modify the Federal Arbitration Act by carving out an exception for cases involving sexual harassment and assault. The bill titled, “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” – which was passed by the Senate on February 10, 2022 and now heads to President Biden’s desk for his signature – will ultimately transform how businesses resolve allegations of workplace sexual harassment and assault.
If enacted, the bill will undoubtedly be a significant reform in the workplace. The bill prohibits pre-dispute arbitration agreements and pre-dispute joint-action waivers and renders existing agreements unenforceable for any case filed under Federal, Tribal, or State law and relates to a sexual assault dispute or a sexual harassment dispute. Additionally, the bill expressly applies retroactively, stating it covers “any dispute or claim that arises or accrues on or after the date of enactment.” Thus, the bill would prohibit enforcement of contract provisions that mandate third-party arbitration of workplace sexual harassment or assault claims, regardless of when the alleged act occurred.
Employers should not scrap arbitration agreements entirely just yet. Notably, although the bill bans pre-dispute agreements to arbitrate such claims, potential employee-plaintiffs still have the option to choose arbitration, rather than go to court, after the claim arises. There will remain potential employee-plaintiffs that prefer arbitration. Indeed, this is reminiscent of the continued use of confidential settlement agreements when claims relate to sexual harassment or discrimination in jurisdictions that have thrown down additional hurdles for parties to enter into confidential agreements.
Based upon messaging emanating from the White House earlier this month that appear to support the passage of H.R. 4445, it appears the President will likely sign the bill. Employers should now begin to evaluate their current arbitration agreements and be highly cognizant of the bill’s new limitations when addressing issues regarding sexual assault and harassment in employment contracts.