New Federal Law Ends Forced Arbitration of Sexual Assault and Sexual Harassment Claims: What Employers Should Know
On March 3, 2022, President Biden signed into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “Act”). Significantly, the Act amends the Federal Arbitration Act (FAA) which allowed employers to enforce mandatory predispute resolution through arbitration. The Act invalidates all predispute arbitration agreements and class or claim waivers to the extent they are sought to be applied to any claim of sexual assault or sexual harassment, and provides that victims of sexual assault and/or harassment in the workplace, are given the option of bringing their claims in court.
How the Act Compares to New York Law
In 2018, New York State enacted Section 7515 of the New York Civil Practice Law and Rules (CPLR 7515) which invalidated predispute agreements to arbitrate sexual harassment claims “except where inconsistent with federal law.” In 2019, New York expanded the mandatory arbitration prohibition in CPLR 7515 to all claims of discrimination.
New York Courts have been split on whether CPLR 7515 was preempted by Federal law. With the passage of the Act, it is now clear that in New York, and across the nation, predispute agreements requiring mandatory arbitration of claims of sexual assault or sexual harassment are now prohibited.
New York’s CPLR 7515 is more restrictive than the Act since it prohibits predispute arbitration agreements for all claims of discrimination. However, it remains to be seen whether New York Courts will interpret CPLR 7515 to invalidate mandatory arbitration provisions unrelated to sexual assault or sexual harassment claims, as New York’s broader arbitration prohibition may be ruled preempted by the FAA.
What Employers Need to Know:
- The Act applies to all claims of sexual assault or sexual harassment that arise or accrue after March 3, 2022, regardless of the date of the agreement at issue.
- The Act gives employees the option to invalidate arbitration agreements and class or collective action waivers with respect to sexual assault and sexual harassment claims. This means employees who have signed arbitration agreements now have the option to choose to arbitrate these claims or pursue them in court regardless of their contractual agreements with their employers.
- The Act does not affect arbitration agreements with respect to claims unrelated to sexual assault or sexual harassment.
How Employers Can Prepare
Based upon the new law, employers should review the arbitration provisions in their agreements to ensure compliance with the Act.