At a time when bipartisan support for legislation is difficult to obtain, the U.S. Senate unanimously passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 on February 10, 2022 – just days after the House of Representatives passed the bill on February 7. President Biden is expected to sign the bill into law, restoring survivors' rights to hold their perpetrators – and the corporations who enable them – accountable in court, rather be forced into forced, secret, non-appealable, usually low award arbitration.
One of the most significant changes to employment law in years, the legislation bans the practice of using clauses in employment contracts that require victims of sexual assault and harassment to pursue their cases in forced arbitration. The bill defines a sexual assault dispute as “a dispute involving a nonconsensual sexual act or sexual contact, as such terms are defined in section 2246 of title 18 or similar applicable Tribal or State law, 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.”
Forced arbitration clauses have become increasingly common in employment contracts. According to the Economic Policy Institute, 56.2 percent of private-sector, nonunion workers are subject to forced arbitration, which is also used to resolve disputes involving claims of discrimination and pay disparity. This means that about 60 million workers in the United States are denied the right to have their employment cases heard by a court.
While a number of companies have banned forced arbitration for sexual harassment in recent years, including Facebook, Lyft, Microsoft, Uber and Wells Fargo, the issue drew heightened attention as a result of the efforts of former Fox News host Gretchen Carlson, who started an advocacy group pushing for congressional action after she sued former Fox News CEO and Chairman Roger Ailes for sexual harassment. Under the new legislation, employers will be prohibited from forcing workers to settle sexual misconduct claims in closed-door arbitration venues that often favor alleged perpetrators. Instead, employees can file suit in court with their own legal representation.
The law gives individuals a choice between going to court or going to arbitration to resolve sexual harassment or sexual assault allegations. It allows an employee and employer to agree to arbitrate such disputes provided such agreement arises after the dispute occurs. Survivors of sexual assault or sexual harassment who may not want to go to court can voluntarily choose to arbitrate their claim to ensure embarrassing or sensitive information remains private.
The measure is also retroactive, invalidating any existing arbitration agreement which forces parties to arbitrate sexual harassment and sexual assault disputes on an individual basis or as a class or collective action. To the extent current employees are subject to arbitration agreements that require them to arbitrate sexual harassment or sexual assault disputes, such agreements are no longer enforceable vis-à-vis those claims.
To comply with the bill, employers can continue to use current arbitration agreements that require employees to arbitrate disputes. However, they can no longer enforce the agreement when an employee raises a sexual harassment and sexual assault claim. Companies that decide not to revise existing agreements should issue a policy clearly stating sexual harassment and sexual assault claims are no longer subject to its arbitration policy/agreement.
If you are an employer or an employee with questions or concerns about sexual harassment or assault in your workplace, please contact us at 973.707.3322 or via email at LFarber@LFarberLaw.com.
The contents of this writing are intended for general information purposes only and should not be construed as legal advice or opinion in any specific facts or circumstances.