On March 3, 2022, President Biden signed a new law, H.R. 4445, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, invalidating arbitration agreements that prevent a party from filing a sexual assault or sexual harassment claim in a court of law if the party so desires. In signing the bill into law, Vice President Harris pronounced that the passage of this law will “make our nation’s workplaces more safe and more just” as “forced arbitration silences survivors of sexual assault and harassment” and “shields predators instead of holding them accountable” and denies individuals, most often women “to sign away the right to seek justice in court.”
This new amends the Federal Arbitration Act (FAA) to prohibit employers from enforcing contract clauses requiring employees to arbitrate workplace sexual harassment or assault claims. Under the law, employees are still permitted to choose the option of bringing such claims through arbitration after the claim arises. The new law also applies to class or collective actions and permits the named representative of a class or collective action bringing a sexual harassment or sexual assault claim to move to invalidate an arbitration agreement or class/collective action waiver. Determination about whether a particular claim is governed by the law must be made by a court applying federal law, not by the arbitrator.
Under the new law, “sexual assault” is defined as a nonconsensual sexual act or contact, as defined under federal law, or applicable tribal or state law, including when the victim lacks capacity to consent. “Sexual harassment” is defined by applicable federal, tribal, or state law.
The law applies to any new claim of sexual harassment or sexual assault under federal, state, or tribal law that arises or accrues after March 3, 2022 regardless of when the alleged bad acts occurred. The law also has a retroactive impact that can serve to invalidate existing pre-dispute mandatory arbitration agreements executed prior to March 3, 2022. However, this retroactive impact does not apply to pending arbitrations.
The law does not cover other types of harassment claims, other than sexual harassment or sexual assault and does not pertain to other types of employment discrimination claims, such as those based on race discrimination or gender discrimination. However, it should be noted that Vice President Harris stated that the “administration will work with Congress on broader forced arbitration legislation….to protect the rights of workers in cases of wage theft, racial discrimination, and unfair labor practices.” The new law also does not change the existing requirement that Title VII claims must initially be filed with the EEOC or a state or local fair employment agency.
This new Federal law re-enforces employment law in New Jersey and other states. In 2019, New Jersey passed a law amending the New Jersey Law Against Discrimination (NJ LAD Amendment), which sparked challenges to mandatory arbitration agreements. Under the NJ LAD Amendment, any provision in an employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment is deemed unenforceable as against public policy, and the statute expressly prohibits any provision that prospectively waives rights or remedies under the Law Against Discrimination, N.J.S.A. 10:5-1, et seq., or any other statute or case law. This prohibition prompted challenges of enforceability of arbitration agreements, jury waivers, and class action waivers, with some New Jersey courts denying such challenges based on a violation of the Federal Arbitration Act (FAA).
Now that the FAA has been amended, however, there should be more clarity in New Jersey. Under both Federal and New Jersey Law, employees will not be required to arbitrate claims of sexual harassment and sexual assault.
Takeaways
In order to comply with the new law, employers should review and revise any arbitration provisions in employment agreements, arbitration agreements, and any other contracts to comply with this law. Practitioners should also continue to monitor the court challenges as to the NJ LAD Amendment.
This summary is for informational purposes only and is not intended to constitute legal advice. This information should not be reused without permission.
