Mandatory arbitration agreements for all employment claims will no longer be enforceable under a newly passed law. On March 3, 2022, President Biden signed the Ending Forced Arbitration Act (the “Act”), which invalidates previously agreed upon arbitration clauses to resolve sexual harassment or sexual assault disputes, a bill that had previously passed with wide bipartisan support in the House and Senate. Now, regardless of when an arbitration agreement was signed, mandatory arbitration will not be enforced for claims that arise on or after the Act became effective on March 3, 2022. The Act specifically states:
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.
The Act does not specifically define sexual harassment or sexual assault; the terms will be defined as provided in the federal criminal code or by similar tribal or state law. If the employee does not want to arbitrate, they cannot be compelled to do so. Employees may prefer to arbitrate for confidentiality concerns, and the Act does not prohibit arbitration if an employee chooses to arbitrate. Under the Act, claimants may also choose to invalidate waivers of their right to litigate such claims in joint, class, or collective action proceedings.
This change should not impact employment claims in Maryland. Nearly four years ago, Maryland passed the Disclosing Sexual Harassment in the Workplace Act of 2018, which prohibited employers from requiring their employees to submit to mandatory arbitration for sexual harassment or retaliation claims.
In response to this new Act, employers nationwide should ensure template employment agreements and other pre-dispute agreements include language providing that employees may voluntarily elect to arbitrate sexual harassment and sexual assault disputes, but are not required to do so. Additionally, employers should ensure that all agreements do not include waivers of right to joint, class, or collective action proceedings for these claims. Finally, employers should confirm that their employees have received recent sexual misconduct training. For many companies who have been working remotely for two years, now may be a good time to consider planning an upcoming training.
Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.
[View source.]
