New Legislation Will Put an End to Mandatory Arbitration in Sexual Assault and Harassment Claims

Employment and Labor Alert

(by Steve Antonelli and Jessica Altobelli)

In a recent show of bipartisanship, both the House of Representatives and the Senate recently passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (H.R. 4445). President Biden has supported the Bill, urging Congress to pass it, and is expected to sign the Bill into law any day. Like the 2017 prohibition on tax deductions for amounts paid for sexual harassment settlements that are subject to a nondisclosure agreement, this Bill is a product of the “#MeToo” movement that will serve to bring greater transparency to alleged sexual misconduct in the workplace.

If enacted into law, the Bill will amend the Federal Arbitration Act to prevent companies from enforcing mandatory arbitration clauses against parties who bring claims of sexual assault or harassment. Instead, prospective plaintiffs will be given the choice of whether to proceed with arbitration or litigate their claims in the public forum of a federal court. This decision will be available even to plaintiffs who have already signed contracts agreeing to mandatory arbitration, so long as the alleged dispute itself arises after enactment of the law, as the law will apply retroactively to make mandatory arbitration provisions voidable. The law will not, however, allow cases that have already been decided in an agreed upon arbitration to be re-opened or re-litigated.

The Bill will also enable individuals to bring collective actions and it will allow disputes over its application to be made by the federal courts, rather than by an arbitrator. It will also apply to cases filed under federal, state, or local law. Employers that utilize forced arbitration provisions in employment agreements should review their agreements for necessary revisions and be mindful of the fact that, in a few days, the forced arbitration provisions of their existing agreements may be voided by employees alleging sexual assault or harassment.

Babst Calland’s Employment and Labor Group will continue to keep employers apprised of further developments related to this and other employment and labor topics. If you have any questions or need assistance in addressing the above-mentioned area of concern, please contact Stephen A. Antonelli at (412) 394-5668 or santonelli@babstcalland.com or Jessica L. Altobelli at (412) 394-6557 or jaltobelli@babstcalland.com.

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