Congress Ends Mandatory Arbitration of Sexual Harassment Claims

Both houses of the U.S. Congress overwhelmingly passed legislation that is now headed to President Biden’s desk to end forced arbitration of sexual assault and harassment claims.

When signed, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 would amend the Federal Arbitration Act to essentially void and prohibit the enforcement of any current or future contract provisions that mandate third-party arbitration of sexual harassment or assault claims. An individual can still choose to proceed with an arbitration after an incident of sexual misconduct if they wish to do so.

This would be most significant for the workplace as “[a]n estimated 60 million American workers have clauses tucked into their employment contracts forcing them to settle any allegations of sexual misconduct in private arbitration proceedings, rather than in court,” according to the AP.

The legislation makes two types of provisions commonly found in employment contracts unlawful. “Pre-dispute arbitration agreements” are provisions in employment contracts that mandate arbitration of disputes before the disputes even arise. “Pre-dispute joint action waivers” are provisions in employment contracts that waive an individual’s right to participate in a joint, class, or collective action once an incident occurs. Neither of these types of provisions will be enforceable under the new law.

The Act applies to mandatory agreements and waivers related to sexual harassment and sexual assault claims written in any contract, giving protections to individuals who may have signed service agreements that included arbitration provisions.

The law gives courts the right to determine whether the law will apply to a particular claim, even where an employment contract contains provisions that “delegate such determinations to an arbitrator.”