You may recall that a couple of weeks ago I sent out an update that the Senate had passed a bill that would severely limit the use of forced arbitration agreements and class action waivers covering allegations of sexual harassment. Well, President Biden signed the Bill into law last Friday, the 3rd.
The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 is now law. The Act amends the Federal Arbitration Act by adding a new section:
[A]t the election of the person alleging conduct constituting a sexual harassment dispute or a sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct, no pre-dispute arbitration agreement or pre-dispute 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 allows employees to void portions of arbitration agreements requiring them to arbitrate sex assault/harassment claims
The Act does not affect agreements to arbitrate claims other than sex harassment/assault.
The Act applies to all claims arising after March 3, 2022, the day that it was signed by President Biden.
Bottom line: If you have agreements requiring your employees to submit issues to binding arbitration rather than suing you, the Act only applies to them to the extent that they require the arbitration of sexual harassment and sexual assault claims. If you were thinking of implementing an arbitration agreement to avoid employment-related class actions, among other things, you can still do so – just not sex assault/harassment claims.
Call me directly if you want to discuss the ins and outs of employment arbitration agreements.