Who said bipartisanship was dead? In a rare display of bipartisanship, the House and Senate have passed the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (H.R. 4445). The text of bill can be found here. The bill still needs to be signed by President Biden, but he has already expressed support for the bill, and he could sign the bill into law before the end of the week.
When it is signed into law, HR 4445 will amend the Federal Arbitration Act (or FAA) to invalidate pre-dispute arbitration agreements and pre-dispute joint-action waivers involving claims of sexual harassment and sexual assault. Specifically, Section 402(a) of the law would provide that:
Notwithstanding any other provision of this title, at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct, no predispute arbitration agreement or pre-dispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.
The law would also require that determinations about the applicability of the law to arbitration agreements would be decided by the courts – not an arbitrator. As written, the law would apply to “any dispute or claim that arises or accrues on or after the date of enactment of this Act.”
Effectively, arbitration agreements requiring an individual to arbitrate a future claim of sexual assault or sexual harassment will be unenforceable if they accrue after HR 4445 is signed into law. Likewise, agreements requiring an individual to proactively waive their right to participate in a joint, class, or collective action of a future sexual assault or sexual harassment claim are also unenforceable. Under HR 4445, the aggrieved party would have the ability to choose whether to arbitrate their claims or file a lawsuit in court.
To be clear, this law is limited to disputes involving claims of sexual assault or sexual harassment. The HR 4445 defines sexual assault and sexual harassment broadly, and both definitions encompass actions constituting sexual assault and sexual harassment under federal, tribal, or state law:
Sexual Assault Dispute means 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.
Sexual Harassment Dispute means a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.
Bottom Line
Once HR 4445 is signed into law, employers should be aware that portions of their existing arbitration agreements may be unenforceable. While employers are barred from entering into these types of agreements, HR 4445 provides that employees cannot be compelled to pursue their claims in arbitration. Instead, HR 4445 permits employees to choose whether or not to pursue arbitration or to file their action in court.
Other types of employment claims may still be subject to mandatory arbitration and joint-action waivers, but HR 4445 makes clear that they cannot be enforced against claims of sexual assault and sexual harassment.