Congress Passes Groundbreaking #MeToo Arbitration Legislation
On February 10, 2022, in a rare bipartisan effort, the U.S. Senate passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (the “Act”), which amends the Federal Arbitration Act to make pre-dispute arbitration agreements covering sexual harassment and sexual assault claims unenforceable. The Act also eliminates class or collective action waivers with respect to sexual assault and sexual harassment claims arising or accruing after its enactment. The U.S. House of Representatives previously passed a similar version and President Biden is expected to sign the Act.
Arbitration is a widely-used alternative dispute resolution process that is considered to be more efficient than litigating a dispute in court. Generally speaking, arbitration is quicker, cheaper, and a more flexible process than filing a lawsuit. Many employment contracts contain arbitration clauses; thus, employees agree as a condition of their employment to arbitrate disputes that fall within the scope of the arbitration provision. Oftentimes these arbitration clauses are broad, and encompass any dispute that may arise out of or be related to the employee’s employment with the organization.
Once signed into law, the Act will invalidate agreements to arbitrate to the extent they require employees alleging workplace sexual harassment or sexual assault to arbitrate such claims. The courts will likely further define the scope of the Act and its impact on existing arbitration agreements. The Act specifies that the courts, and not arbitrators, will decide whether claims are subject to arbitration.
If an employer’s goal is to protect all remaining arbitration rights and class action waivers in employment agreements, employers should consider revising the language of their arbitration clauses to either exclude allegations specifically relating to sexual harassment or sexual assault or to make clear that the employee will have the choice to decide whether or not to these types of claims. Employers should also consider adding a severability clause to any arbitration agreements, indicating that, if any independent provision of the agreement is declared invalid, the remaining provisions are still enforceable.