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An End to Mandatory Arbitration for Sexual Harassment Claims Is on Its Way

The U.S. Senate has passed the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” Already passed by the U.S. House of Representatives and expected to be signed by President Biden, the bill makes substantive changes to the Federal Arbitration Act (FAA). The FAA authorizes the use of arbitration agreements, making them “valid, irrevocable, and enforceable.” Many employers require employees to sign clauses that mandate the arbitration of all employment disputes. However, the new law will invalidate those arbitration agreements for sexual assault and sexual harassment. Sexual assault is defined as involving a “nonconsensual sexual act or sexual contact.” The new law also invalidates provisions requiring employees to waive their rights to bring sexual assault or sexual harassment claims jointly or on a class basis.

Employees alleging sexual assault and/or sexual harassment may decide whether to pursue arbitration or file a lawsuit. The courts, not arbitrators, will determine the validity or enforceability of the arbitration agreement under the new law, irrespective of what the agreement states. Once signed into law, the new provision will apply to disputes and claims arising thereafter. Thus, it will not apply retroactively. Arbitration of employment matters outside the scope of the changes remains enforceable. It is unclear whether an employee who alleges multiple claims that include sexual assault or sexual harassment must arbitrate other claims separately.