Biden Signs Bill Limiting Arbitration of Sexual Harassment Cases

March 4, 2022

Yesterday, President Joe Biden signed into law a bill that will transform how employers across the nation resolve allegations of workplace sexual harassment and assault, and how such issues are addressed in employment contracts.

The Bill, which passed the Senate earlier in February, amends the Federal Arbitration Act to ban agreements mandating arbitration for workplace sexual harassment or assault claims if they were signed before the dispute arose. Employees could still opt to arbitrate these types of claims if they choose.

However, the bill prohibits enforcement of pre-dispute arbitration agreements “with respect to a case” that relates to workplace sexual harassment or sexual assault. The lack of definition as to what constitutes a “case” as opposed to a “claim” may leave employers uncertain about particular claims, such as other types of harassment, discrimination, or retaliation that often accompany claims of sexual harassment. It is unclear how the courts will settle the discrepancy.

Disputes covered by the bill are limited to claims of nonconsensual sexual acts or contact as well as to conduct that is alleged to constitute sexual harassment under federal, state, or tribal law. Additionally, while the bill would supersede other provisions of law, other categories of harassment—such as race or age—are not covered by the bill. In the future, employers should expect to see enforceability of an arbitration agreement, and any questions as to whether the legislation applies to a dispute, decided by a judge, not an arbitrator, as was typically the case in the past.

While some states—such as New Jersey, Tennessee, California, Vermont, and Washington—have enacted anti-arbitration legislation which prohibits non-disclosure provisions in employment agreements, current federal law permits private employers to choose a private forum, such as arbitration, to resolve employment disputes, including claims of sexual harassment or assault. Now, private employers join the ranks of certain government contractors who are already required to carve out sexual harassment and assault claims from their arbitration provisions.

Employers would do well to revisit their employment agreements in light of this new law. While the law is aimed at prohibiting “forced arbitration,” it remains silent on the employer’s ability to include provisions in their agreements governing the manner in which such claims are tried in court—such as before a judge, as opposed to a jury, which invites less publicity than a jury trial. Employers should note that some state laws already strictly limit jury trial waivers.

Further, and significantly, employees can still choose arbitration. Therefore, the law does not necessarily prohibit arbitration clauses that contain “opt out” provisions allowing employees the option to proceed with sexual harassment and assault claims in court.

The information contained in this publication should not be construed as legal advice, is not a substitute for legal counsel, and should not be relied on as such. For legal advice or answers to specific questions, please contact one of our attorneys.