Last week, the Senate passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (H.R. 4445) (the “Act”), which prohibits the enforcement of mandatory arbitration agreements in connection with sexual harassment and sexual assault claims. The measure had previously passed in the House on February 7th. Although President Biden has not yet signed the Act into law, he has voiced support for the Act, and therefore, his signature is expected any day.
The Act is a win for #MeToo advocates who have lobbied that mandatory arbitration agreements create a culture of secrecy regarding workplace harassment and have protected serial harassers from public scrutiny. The Act was passed approximately four years after the #MeToo movement gained momentum in the fall of 2017.
Employers who utilize employee arbitration agreements should take note of the following key points in the Act:
- The Act only prohibits the enforcement of arbitration agreements for certain claims. Accordingly, employers do not need to nullify current arbitration agreements or refrain from providing arbitration agreements to new hires.
- Arbitration agreements can still be enforced in connection with other employment-related claims, such as other forms of discrimination or harassment.
- Arbitration of sexual harassment or sexual assault claims is permitted if the employee bringing the claim selects arbitration rather than court.
- The Act will apply to any claim that accrues after the enactment of the law. Therefore, it will not affect any claims currently in arbitration.