March 30, 2022 

President Biden recently signed significant legislation titled “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021,” (“the Act”) which prohibits forced arbitration for sexual assault and sexual harassment claims on March 3, 2022. The new legislation amends the Federal Arbitration Act (FAA) and requires courts, not arbitrators, to decide whether a claim constitutes sexual assault and/or sexual harassment.

The new law received extensive bipartisan support. On Feb. 7, 2022, the Act was passed in the House by a 335-97 vote and just three days later, was passed in the Senate by voice vote. The Act is applicable to predispute arbitration agreements mandating arbitration of future claims and joint-action/class action waivers for sexual assault and sexual harassment disputes.  Under the Act, a “sexual assault dispute” is defined as a dispute involving a nonconsensual act or sexual contact, including when the victim lacks capacity to consent. A “sexual harassment dispute” is defined as a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal or State law. Under the Act, no mandatory arbitration agreement or joint-action/class action waiver relating to sexual assault and/or sexual harassment claims is valid or enforceable absent consent from the complainant making such allegations and/or the named representative of the class action. Now, America’s approximately 60 million workers who are subject to arbitration clauses may go to court rather than mandatory arbitration.

The Act does not apply retroactively and is only applicable to a dispute or claim arising after the Act’s enactment date. Even if employers have an existing arbitration agreement which predates the enactment of the new law, it would not be enforceable against claims arising after the Act’s enactment date. Therefore, employers will need to review their mandatory arbitration agreements and class action waivers and include carve outs for any provisions regarding sexual assault and/or sexual harassment claims.

As for the future landscape of sexual assault and harassment claims, the Act will most likely lead to an increase in sexual assault and harassment filings in court. Employers will need to budget for a potential increase in litigation fees and costs. For cases in which other claims are alleged along with sexual assault and harassment claims, such matters may potentially be filed and/or defended on two fronts — in arbitration and in court. The Act also provides a public forum for plaintiffs who have filed sexual harassment and assault claims to “have their day in court.” This public forum will replace the prior standard of confidentiality in arbitration proceedings. Consequently, there is now a threat of public exposure regarding these types of claims for employers. This threat may lead to either an increase in settlements and/or settlements of higher value. Employers should follow best practices and ensure that they have policies and procedures in place to prevent and remedy any issues related to sexual harassment in the workplace, including anti-harassment training, effective reporting and investigation procedures and appropriate corrective measures.

This article also appears in Crain’s Cleveland Business. Subscribers, click here.

Jennifer Whitt is a partner at Walter | Haverfield who focuses her practice on labor and employment law. She can be reached at jwhitt@walterhav.com or at 216.928.2921.