On March 3, President Joe Biden signed into law one of the most significant modifications ever made to federal arbitration law. Known as the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (the Act), the new law essentially restricts employers from forcing workplace sexual harassment or assault claims to be resolved by arbitration.
Specifically, as previously reported, the Act provides that an employee asserting allegations of sexual harassment or assault – either on an individual basis or as a proposed class representative – and who previously signed an agreement with their employer to arbitrate claims between the parties, has the right, notwithstanding such agreement, to elect to pursue their claims in court rather than in an arbitral forum. Beyond this, the Act also includes several ancillary yet notable provisions, including that any disputes as to whether the Act applies will be decided by a court (rather than an arbitrator) and that the Act applies with respect to any dispute or claim that arises or accrues on or after March 3, 2022.
As the new law does allow for employees to choose to arbitrate their sexual harassment and assault claims, employers do not need to altogether halt the usage of arbitration agreements. Given the choice, some employees may prefer to arbitrate their claims. That being said, employers should review their arbitration agreements immediately to ensure compliance with the Act.