On March 3, 2022, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (the “Act”) into law. The Act makes agreements to arbitrate sexual assault or sexual harassment claims unenforceable. Employers should review the following agreements:
Arbitration Agreements: The Act allows an individual who brings a claim of sexual assault or sexual harassment to void any previously signed agreement to arbitrate the dispute. The individual bringing a claim of sexual assault or sexual harassment may still choose to arbitrate sexual assault or sexual harassment claims. Defendants, however, in sexual assault or sexual harassment cases will no longer be able to compel arbitration based on an underlying agreement.
Joint Action Waivers: In addition, the Act makes joint action waivers unenforceable with respect to claims of sexual assault or sexual harassment. The Act defines a “joint action waiver” as an agreement to waive the right of an individual to participate in any joint, class, or collective action before any judicial, arbitral, administrative, or other forum. The Act allows an individual who wishes to participate or act as a named representative in a class or collective action alleging sexual assault or sexual harassment to void any joint action waiver they previously signed.
Agreements Not Covered by the Act: Parties may still enter into agreements to arbitrate sexual assault or sexual harassment claims after a dispute arises. Employers may also continue to use arbitration agreements or joint action waivers for other types of employment claims. It is not clear, however, how the Act will apply in cases where an individual makes a claim of sexual assault or sexual harassment in addition to other claims.
The Act is effective immediately. Notably, the Act allows individuals bringing claims of sexual assault or sexual harassment to void existing mandatory arbitration agreements and joint action waivers; even if they were signed before the law was enacted. Therefore, the Act will have far-reaching implications for employers who regularly require employees to sign arbitration agreements or joint action waivers. Employers should work with counsel to review and modify their employment agreements to comply with the new law.