The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 passed by voice vote in the US Senate on February 10. The US House of Representatives approved the same measure with bipartisan support on February 7. President Joseph Biden has signaled his support for the bill and is expected to sign it into law.

H.R. 4445, developed in the wake of the #MeToo movement, is designed to address concerns that arbitration agreements are used to shield allegations of sexual harassment and assault from public disclosure and protect those accused of harassment and abuse. If signed into law, the bill renders mandatory arbitration agreements and joint-action waivers unenforceable in disputes involving allegations of sexual assault or harassment.

The bill specifically prohibits enforcement of pre-dispute arbitration agreements or joint-action waivers in cases filed under federal, tribal, or state law that relate to sexual assault or sexual harassment, unless the person challenging the conduct or the named representative of a class or collective action elects to enforce the agreement or waiver. The bill defines pre-dispute arbitration and joint-action waivers as

• any agreement to arbitrate a dispute that had not yet arisen at the time of making the agreement; and
• any agreement that prohibits or waives the right of one of the parties to participate in a joint, class, or collective action in a judicial, arbitral, administrative, or other forum.

While some in Congress expressed an intention for the bill to prohibit enforcement of any arbitration agreement or joint-action waiver, the bill only applies to disputes or claims “that arise[] or accrue[] on or after the date” the bill is enacted. Thus, the scope of the bill and whether it applies retroactively to agreements or waivers that pre-date the bill’s enactment is unclear.

The bill further requires that courts—not arbitrators—resolve all disputes relating to the applicability of the bill to an action, regardless of whether the arbitration agreement states that such determinations must be made by an arbitrator.

IMPLICATIONS FOR EMPLOYERS

Arbitration agreements and joint-action waivers are widely used by employers as they reduce litigation costs and tend to result in quicker decisions than claims tried in federal or state court. The bill does not prohibit employers from using these tools, but likely creates a gap in their enforcement.

Assuming the bill is signed into law by President Biden, it is not clear yet how courts will apply the enforcement prohibitions to cases or class actions that allege other employment claims in addition to sexual harassment or assault claims. In the instance of a class action, it is unclear if a named plaintiff’s individual sexual harassment or assault allegation will be sufficient to invalidate arbitration agreements or joint-action waivers otherwise applicable to an entire class, where the class claims are void of any sexual harassment or assault allegations. Until the courts provide further clarity on this issue, employers should anticipate that the bounds of the bill will be tested in the near future through the incorporation of individual sexual harassment or assault claims in otherwise unrelated employment class actions.

Employers should evaluate their policies and practices in light of the bill, including their procedures for responding to employee complaints of sexual harassment and assault. The bill underscores the importance of effective sexual harassment prevention training and protocols. Employers should focus their efforts on addressing and correcting the behaviors that can lead to sexual harassment claims in the first instance.

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