President Biden Expected to Sign “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act” (UPDATED 3/4/2022)

UPDATED 3/4/2022: On March 3, 2022, President Biden signed into law the Ending the Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, which we previously wrote about below. The Act is effective immediately. Employers should consider consulting with counsel to review any arbitration agreements or class action waivers for compliance with the Act.

On February 10, 2022, the United States Congress passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “Act”).  This bipartisan Act is a significant workplace reform bill that was originally introduced several years ago during the #MeToo movement.  President Biden is expected to sign the Act into law in the near future.  This newsletter discusses some of the main features of the Act of which employers and others should be aware, assuming it becomes law.

The Act restricts the use of mandatory arbitration agreements and joint or class action waivers for sexual assault and sexual harassment disputes.  Under the Act, a person who alleges sexual assault or sexual harassment claims may choose to invalidate the following:

• a pre-dispute arbitration agreement (i.e., an agreement to arbitrate a dispute that has not yet arisen at the time of the agreement), or
• a pre-dispute joint-action waiver (i.e., a waiver of the right to participate in a joint, class, or collective action concerning a dispute that has not yet arisen at the time the person waived the right)

with respect to a case filed under federal, tribal, or state law that relates to the sexual assault or sexual harassment dispute.  In other words, plaintiffs alleging sexual assault or sexual harassment can now decide whether to litigate those claims in court or arbitration and whether to bring those claims individually or with others.  This is the case even if they had previously signed arbitration agreements or joint-action waivers that would otherwise require their sexual assault or sexual harassment claims to be arbitrated or decided on an individual basis.

The Act applies to sexual assault and sexual harassment disputes that arise on or after the date of enactment of the Act.  Accordingly, the Act applies to all existing pre-dispute agreements with mandatory arbitration or class action waiver provisions, even if they were signed prior to the enactment of the Act.  The Act does not prohibit parties from making an agreement to arbitrate a sexual assault or sexual harassment dispute after the dispute arises.

Employers and other entities or individuals with mandatory arbitration agreements or class action waivers should review their agreements and waivers, and if necessary, work with legal counsel to update them for compliance with the Act.  Employers in some states, including Illinois, may already be subject to existing laws addressing mandatory arbitration of harassment claims.  For example, the Illinois Workplace Transparency Act (“WTA”) prohibits employment agreements that require arbitration of any claims related to unlawful discrimination, harassment, or retaliation.  For more information regarding the WTA, please see our August 2019 newsletter.