On March 3, 2022, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “Act”) into law to amend the Federal Arbitration Act and prohibit the mandatory arbitration of sexual assault and sexual harassment claims. The Act gives a claimant the choice to address sexual harassment and sexual assault claims in court, even if it was previously agreed upon to arbitrate such disputes. In addition, the Act allows a claimant to void a joint-action waiver (i.e. a waiver to participate in a class action claim) covering sexual assault and sexual harassment claims, meaning the claim can be pursued as part of a class action, in court or in arbitration, even if the claimant previously waived that right.
Arbitration is an alternative to litigation where a claim is submitted to one or more neutral third parties and a binding decision is determined. Arbitration has often been viewed as a faster and more cost effective alternative to litigation. In addition, arbitration proceedings are generally private, and final agreements between the parties are often negotiated to be kept confidential. The agreement to arbitrate can be found in over 50% of employment agreements. When it comes to resolving disputes brought by employees, employers prefer to do so quickly, and more importantly, out of the public eye and out of the hands of a jury. One of the driving forces behind the Act was the recent push for increased transparency of proceedings and assistance to victims of sexual harassment and sexual assault claims resulting from the #MeToo movement, which found global recognition in 2017. The Act will significantly impact the enforcement of agreements pertaining to arbitration and the waiver of joint-action addressing sexual harassment and sexual assault claims.
What Employers Should Know
- The Act pertains to pre-dispute arbitration agreements and joint-action waivers, meaning any agreement to arbitrate or any joint-action waiver that was effective prior to when a dispute arose will no longer be valid or enforceable at the claimant’s option.
- A claimant of a sexual assault or sexual harassment case may choose to utilize arbitration, but cannot be contractually obligated to do so.
- Employers may enforce an agreement to arbitrate or a joint-action wavier for claims not pertaining to sexual assault or sexual harassment.
- Agreements to arbitrate, or joint-action waivers that are entered into after the incident occurs, are still enforceable.
Action Items for Employers
- Review Company Policy. Employers should ensure that all types of harassment (including sexual harassment) are prohibited. Employers should also ensure that employees have multiple options for reporting complaints about sexual harassment, and could consider providing an anonymous reporting hotline to employees. Employers should take all complaints of sexual harassment seriously and take prompt disciplinary action when necessary. In addition, Employers should keep detailed and accurate records of the communication pertaining to any complaint or discipline.
- Keep Employee Training Relevant. Most sexual harassment training programs are out of date and ineffective. Employers should focus on addressing and correcting the behaviors that can lead to sexual harassment claims in the first instance.
- Review Existing Arbitration Agreements. Employers should review the language of existing arbitration agreements and joint-action waivers. Remember that portions of the agreement may remain enforceable, but it is important to be aware of provisions that are no longer permitted under federal law, and to make revisions in future agreements.
For assistance in the review or revision of your company’s arbitration agreement or joint-action waiver, contact a Critchfield employment law attorney today.