Congress passed, and the President has signed into law a transformative bill that allows employees to avoid enforcement of pre-dispute arbitration agreements in workplace sexual assault or harassment claims.
The law amends the Federal Arbitration Act (FAA) to permit an employee alleging sexual assault or harassment to invalidate a pre-dispute arbitration agreement or joint-action waiver. If an employee signs an agreement to arbitrate employment-related claims and later experiences sexual assault or harassment, the employee may decide to dispose of that arbitration agreement and pursue their claims in court. Likewise, if an employee agreed to pursue claims only individually and not as a member of a class, the employee may dispense with that agreement and pursue claims on a joint basis with other alleged victims.
Employees who have signed pre-dispute arbitration or joint-action waiver agreements may still opt to arbitrate such claims if they would prefer, but the decision will rest with them. The legislation also explicitly requires courts, not arbitrators, to determine whether the law applies to a given claim, regardless of whether the agreement delegates such authority to an arbitrator.
The law does not apply retroactively. It could still invalidate pre-dispute agreements entered into before its enactment.
The law covers all sexual assault or harassment claims, whether under federal, state, local, or tribal law. Sexual assault is a nonconsensual sexual act or sexual contact, as defined by the U.S. criminal code or similar applicable tribal or state law, including when the victim cannot consent.
Sexual harassment is defined as conduct alleged to constitute sexual harassment under applicable federal, tribal, or state law. This covers anything that is sexual harassment under Title VII. Under Title VII, sexual harassment is unwelcome conduct based on sex where enduring the offensive conduct becomes a condition of continued employment, or the conduct is severe or pervasive enough to create a work environment that a reasonable person would consider intimidating, hostile, or abusive.2
Employers reassess their employment agreements and preparing for the likelihood that sexual assault and harassment claims will no longer be subject to mandatory arbitration.
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