On March 3, 2022, President Biden signed into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, signifying the ban of mandatory arbitration in sexual assault and sexual harassment cases. Many businesses have written arbitration mandates into their employment contracts, but this new federal legislation will allow victims of sexual harassment or sexual assault to resolve their cases in the public court system while retaining the right to choose arbitration if they prefer.
Here’s what employers need to know about the new law.
What The New Law Means for Employers
An arbitration agreement is between an employer and their employees or contractors, and both sides agree to have a neutral third party adjudicate sexual harassment and sexual assault claims instead of bringing the matter to court. Rather than an employer imposing arbitration for a sexual harassment claim filed by an employee, the new law allows workers to decide how they want to pursue their claims – through arbitration or through the court system.
Employers should be mindful that the law applies to claims arising after the new law was enacted regardless of if and when an arbitration agreement was signed. Any existing claims will not be covered by the new law, meaning agreements related to claims made prior to the passage of the new law are still enforceable.
Employers should review all arbitration clauses related to sexual harassment and sexual assault and ensure they are not restricting employees’ rights. Be aware of state-specific laws related to arbitration agreements. California and New York already ban mandatory arbitration of these claims.
Employees Can Still Opt for Arbitration
Despite the bill ending pre-dispute agreements to arbitrate sexual harassment claims, employees who prefer to resolve the matter in a more private forum instead of a public court system may opt for arbitration after the claim arises.