On February 10, 2022, the United States Senate passed H.R. 4445 (the Bill), an amendment to the Federal Arbitration Act (FAA) and otherwise known as the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021. The Bill previously passed the House by a vote of 335–97.

The amendment restricts employers from forcing sexual harassment and sexual assault claims into arbitration, which often requires an employee to incur greater cost and keeps the information out of the public record. The Bill gives individuals alleging sexual harassment or sexual assault the right to void pre-dispute joint-action waivers and proceed in the appropriate court or agency under federal, state or tribal law. This essentially severs these claims from other potential non-sexual harassment/ assault that may proceed in arbitration.

Provisions of the Bill

The Bill encompasses all agreements – whether or not they are part of a pre-dispute arbitration agreement – that would “prohibit, or waive the right of, one of the parties to the agreement to participate in a joint, class, or collective action in a judicial, arbitral, administrative, or other forum.” That individual bringing the claim may, however, still elect to arbitrate claims of sexual harassment or sexual assault where a pre-dispute agreement has already been signed. The amendment would apply to all existing arbitration agreements or other executed waivers, including those executed prior to the amendment’s enactment. All disputes or claims that arise on or after the date the amendment is enacted are subject to this amendment.

The amendment casts a broad net in defining sexual harassment and sexual assault. A “sexual harassment dispute” is defined as “a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.” A “sexual assault dispute” is defined as “a dispute involving a nonconsensual sexual act or sexual conduct.” All claims of sexual harassment and sexual assault will likely be determined by the courts to be subject to this amendment.

President Biden is expected to sign the amendment into law. Once signed, it would take effect immediately.

Response

Employers would be wise to carefully review their arbitration and/or employment agreements to ensure that they comply with this FAA amendment, in addition to other state and federal laws. While this amendment does not invalidate an entire arbitration agreement or provisions as to all claims, employers also must take caution to evaluate the type of claims made by employees when looking to compel arbitration. In circumstances where both sexual harassment/ assault and non-sexual harassment/ assault claims are alleged, employers must balance the potential risks of pursuing some claims in arbitration while the harassment and/or assault claims proceed in court. Careful evaluation of the type of claim brought is important to avoid running afoul of this amendment’s restrictions.