On February 10, 2022, the U.S. Senate passed H.R. 4445, entitled "Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021." The purpose of this Act is to outlaw forced arbitration clauses and joint-action waivers in employment contracts for sexual harassment and assault cases.
The Act, which is soon expected to be signed by President Biden, renders mandatory arbitration clauses and joint-action waivers for these type of claims unenforceable. The Act is silent as to whether these provisions will be enforced in similar cases involving, for example, claims of racial harassment, age discrimination, etc.
The Act expressly applies "to any dispute or claim that arises or accrues on or after the date of enactment." Whether a claim filed after enactment of the Act based on conduct that occurred prior to enactment will be exempt from arbitration and class action remains to be seen, but plaintiffs' attorneys will surely favor of such a reading.
Practically speaking, contracts that contain mandatory arbitration or joint-action waivers for sexual assault or harassment should be modified to exempt these claims, though other similar claims may still be subject to mandatory arbitration, class and collective action waivers, etc.
For your review, the relevant text of the Act is as follows:
§ 402. No validity or enforceability
(a) IN GENERAL.—Notwithstanding any other provision of this title, at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct, no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.
(b) DETERMINATION OF APPLICABILITY.—An issue as to whether this chapter applies with respect to a dispute shall be determined under Federal law. The applicability of this chapter to an agreement to arbitrate and the validity and enforceability of an agreement to which this chapter applies shall be determined by a court, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement, and irrespective of whether the agreement purports to delegate such determinations to an arbitrator.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.