New Federal Law Prohibits Mandatory Arbitration of Sexual Harassment Claims
Mar 15, 2022 | Written by: | Share
On March 3, 2022, President Biden signed into law the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021,” which prohibits businesses from compelling their employees to arbitrate sexual assault and harassment claims. While the legislation only applies prospectively to claims arising on or after the enactment date (March 3rd), it covers all arbitration agreements regardless of when they were signed. All such agreements are now null and void to the extent they compel an employee to arbitrate a complaint of workplace sexual assault or harassment.
This legislation’s practical impact is as broad as it is clear. Beginning March 3, employers may not require their employees to submit to arbitration any sexual assault or sexual harassment claim that may arise during their employment with the company. Nor does it matter if the claim arises under federal, state, or tribal law. If the employee does not want to arbitrate, she or he cannot be compelled to do so.
The New Law Ends Arguments that the Federal Arbitration Act Preempts State Law Prohibiting Arbitration of Sexual Harassment Claims
Three years ago, New Jersey passed similar legislation, amending its Law Against Discrimination to prohibit employer-mandated arbitration of all discrimination claims – not “just” claims of sexual assault or sexual harassment – and retaliation claims as well. It was an open question, however, whether the Federal Arbitration Act effectively preempted the NJ law, such that arbitration could be compelled regardless of NJ’s prohibition. This new federal law puts an end to that possibility for sexual assault and sexual harassment claims.
The definitions of barred claims are broad, with sexual harassment defined however it is under existing law. The law defines a “sexual harassment dispute” as one concerning conduct that the law, whether federal, tribal, or state, defines as sexual harassment. A “sexual assault dispute” is defined as one “involving a nonconsensual sexual act or sexual contact … including when the victim lacks capacity to consent.”
Court, Not Arbitrator, Decides Arbitrability
A threshold question under any arbitration agreement is whether a particular dispute is arbitrable, with parties occasionally starting their battle over just that legal issue. The new law provides that any disputes as to whether an employee’s claim falls under the new law’s prohibition will be decided by a court, not an arbitrator, regardless of what the underlying agreement provides. Stated differently, parties cannot “contract around” this rule and agree that an arbitrator will decide whether a particular claim is or is not arbitrable.
EEOC Welcomes New Law
The same day that President Biden signed the new law, the Equal Employment Opportunity Commission (EEOC) issued a press release offering its “plaintiff’s side” perspective as to its perceived benefits for employees. Describing it as “allow[ing] employees to make [an] informed choice” about the preferred venue to resolve their claims, the EEOC emphasized its view that court filings have an advantage over arbitration in that they expose misconduct to public view, stating: “the #MeToo movement brought to light, in the worst cases, [how] secrecy can shield serial harassers from accountability and allow them to repeatedly abuse employees.” That said, employees who advance sexual harassment claims do not always wish to raise their concerns publicly and often seek to resolve their claims informally through a confidential settlement, and they may continue to do so.
Employees Maintain the Option to Arbitrate If They Wish
Those in favor of arbitration, including someone who wishes to pursue a complaint, may prefer the relative informality of arbitration (although arbitration is not always that streamlined and can involve hearings and motion practice), as well as the fact that the proceedings are private, with all correspondence between and among the parties and with the arbitrator outside of public view. While the hope is that arbitration will be quicker and more efficient than litigation, which can “drag on” for years, not all legal practitioners agree with that view.
Notably, the law does not eliminate arbitration entirely, and an employee who wishes to pursue arbitration pursuant to her or his contractual agreement with an employer retains that option.
Takeaway
Employers have known for years how critical it is to have effective sexual harassment policies, to implement robust training programs for managers and employees on how to identify and prevent sexual harassment, and to treat claims of sex harassment seriously. The “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” provides an added incentive for employers to strengthen and continue those efforts.
Noel A. Lesica, Esq. focuses her practice on labor and employment and general litigation. She has experience in virtually all aspects of employment law, including investigating and addressing claims involving sexual and other forms of unlawful harassment and discrimination, retaliatory practices, wage and hour violations, pay equity violations, leave entitlements under federal, state and local law, and restrictive covenants. Ms. Lesica has also advised clients on a wide range of compliance issues related to COVID-19.
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Any statements made herein are solely for informational purposes only and should not be relied upon or construed as legal advice.