New Federal Law Bans Enforcement of Mandatory Arbitration Agreements in Sexual Assault and Harassment Cases

In order to avoid public scrutiny, many employers require employees and prospective employees to agree to resolve employment disputes in private, confidential arbitration.  As a result, the deterrent of public exposure is eliminated.

To remedy this at least as to sexual harassment in the workplace, on March 3, 2022, President Biden signed into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “Act”).  The Act prohibits the enforcement of pre-dispute mandatory arbitration agreements for claims of sexual assault or sexual harassment in the workplace.

Note, however, that the Act applies only to disputes and claims that arise or accrue on or after the date of enactment (March 3, 2022).  The date on which a dispute or claim arises or accrues is often itself hotly contested as is whether the allegations rise to the level of sexual assault or sexual harassment.  Litigation regarding these and other matters is anticipated.

Importantly, irrespective of what the arbitration agreement may say, the Act makes clear that only a court will determine whether such disputes must be resolved judicially or in arbitration.  The Act states:  “the applicability of this [Act] to an agreement to arbitrate and the validity and enforceability of an agreement to which this [Act] applies shall be determined by a court….”   (Emphasis supplied.)

In other words, however such disputes are resolved, they will be raised in a public forum, providing the deterrent of public exposure intended by Congress.   This is a clear victory for the #MeToo movement.