Many employers require employees to sign agreements that contain arbitration provisions. Under such provisions, employees forgo bringing claims arising out of their employment in court and instead agree that an arbitrator or a panel of arbitrators will decide such disputes. Employers prefer arbitration because it affords a cloak of confidentiality, in contrast to most judicial proceedings, which are open to the public.
Yesterday, President Biden signed the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021,” which represents another step forward for the #MeToo movement. The new legislation amends the Federal Arbitration Act and provides that, notwithstanding the existence of a predispute arbitration agreement or predispute joint-action waiver, a claimant can bring sexual assault or sexual harassment claims in court. The Act also allows such a person to enter into an arbitration agreement or pursue such claims in arbitration at the time of the dispute should he or she so choose. The legislation will apply to disputes or claims that arise or accrue after the legislation is enacted. Now a court, rather than an arbitrator, will decide whether the Act applies.
In 2019, in a similar effort to keep sexual assault claims out in the open, Virginia employers may recall that the General Assembly enacted Virginia Code § 40.1-28.01. That statute invalidated or proscribed nondisclosure or confidentiality agreements that conceal details related to sexual assault claims as a condition of employment.
Given the new law, employers should review any arbitration provisions in their employment agreements. Remember that employers and employees can still agree to arbitrate sexual assault/harassment claims after they have arisen, but employers may want to consider an appropriate “opt-out” provision. Now may also be a good time to review noncompetition covenants as the law regarding their enforceability changes constantly.
