Biden to Sign Law Banning Mandatory Arbitration of Sexual Misconduct Claims

American companies will no longer be able to force employee or consumer claims of workplace sexual assault, harassment, and misconduct into arbitration under a recently passed bill that President Biden is soon expected to sign into law. 

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, perhaps the biggest legislation to emerge from the #MeToo movement, passed with rare and large bipartisan support in both houses of Congress. The bill gives individuals a choice between filing a civil lawsuit in court or going to arbitration to resolve allegations in cases related to sexual harassment or assault. While the law’s most significant impact will be on the 60 million American employees currently subject to such provisions, it also applies to other businesses, such as ride-sharing companies or landlords, that may include mandatory arbitration of sexual misconduct claims in their terms of service agreements or leases.

Existing Mandatory Arbitration Provisions No Longer Enforceable

Specifically, the law provides that “at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute…, no predispute arbitration agreement or predispute 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 act defines “sexual assault dispute” as one “involving a nonconsensual sexual act or sexual contact” and “sexual harassment dispute” as one “relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.” The applicability of the act to a given dispute and arbitration provision will be made by a judge rather than an arbitrator, whether or not the agreement purports to delegate such determinations to an arbitrator.

Importantly, the law will immediately take effect upon President Biden’s signature and apply retroactively. This means that existing agreements or clauses that purport to require arbitration of sexual assault and harassment claims will no longer be enforceable. Employees and consumers who have agreed to such provisions should now be able to ignore them and pursue their claims in court if they so choose. However, the new law should not impact mandatory arbitration provisions that apply to other claims not involving sexual assault or harassment.

If you have any questions about this legislation and how it may impact your rights, please contact us to speak with one of the employment law attorneys at Sommers Schwartz today.