Congress Passes Legislation Banning Forced Arbitration of Claims of Sexual Assault and Harassment

The Senate today, acting on a bipartisan basis, passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which prohibits employers from requiring employees to arbitrate claims of sexual assault or harassment.  The bill was approved earlier this week by a large bipartisan majority in the House of Representatives and President Biden has expressed full support for the measure, which he is expected to sign into law.  The legislation provides that rather than being forced to arbitrate such claims, employees must have the option to bring them in court.  The measure is unusual in that it invalidates such arbitration clauses in agreements previously entered into where the claim accrues after the law goes into effect, in addition to prohibiting the practice going forward.

Employee advocates have long argued these forced arbitration clauses, widely included in employment agreements or stand-alone arbitration policies that employees are required to sign as a condition of employment, constitute an unfair employment practice.  While employees are likely to agree to these conditions up front in order to secure employment, if they do later find themselves with a claim against the company, they may be in a weaker position as a result of having agreed to arbitration.  Many arbitration clauses provide that the proceedings will be confidential, such that the employer will not face public scrutiny as a result of the employee’s claims, and any potential award in the employee’s favor will remain confidential as well.  Many such clauses also prohibit employees from banding together to bring class or collective action claims, and unlike complaints brought in court, arbitration awards can be appealed only on a very limited basis.  Those against arbitration of employment claims also argue that the system favors employers, which are repeat customers of the private arbitration organizations.  While several large companies have taken it upon themselves to ban the use of forced arbitration for sexual harassment claims since the emergence of the #MeToo movement, others have argued that arbitration remains a more efficient and cost-effective way to resolve employment disputes.

Several legislators have expressed that the bill was limited to claims of sexual assault and harassment because there was bipartisan support for such a measure, but they hope it can be expanded to include a wide range of employment claims in the future.

Because the law will apply to previously executed agreements, employers should review their agreements already in place with employees and change their standard terms to be compliant going forward.

This article is intended only as a general discussion of these issues. It is not considered to be legal advice or relied upon in regard to particular legal matters. If you seek assistance with a particular employment law or labor law matter, please contact RPJ Partner Jill Kahn Marshall to discuss.