With broad bipartisan support, Congress passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021. President Biden is expected to sign this bill soon.

The changes this law makes are significant. Under this law, an employer can no longer force an employee to arbitration a claim that involves sexual harassment or sexual assault allegations. Instead, the employee may pursue those claims in state, federal, or tribal court.

The Act also prohibits the waiver of a right to pursue sexual harassment or sexual assault claims as part of a joint action, collective action, or class action.

Under the Act, a “sexual harassment dispute” is a dispute related to conduct alleged to constitute sexual harassment under Federal, Tribal, or State law. “Sexual assault dispute” is a dispute involving a nonconsensual sexual act or sexual contact, as those terms are defined in other statutes.

The most significant part of this statute is that its application is retroactive. So, for employees who have already signed an arbitration agreement, if the employee has a sexual harassment or sexual assault dispute, that old arbitration agreement will not apply. The employee is free to sue in state or federal court.

However, it is not retroactive for cases already litigated through arbitration. Those cannot be reopened and relitigated.

The importance of this Act to individuals who suffer sexual harassment and sexual assault cannot be overstated. This law is a game-changer.  

With this Act, employers must give serious thought as to how to handle sexual harassment and sexual assault claims. One reason that employers have preferred to arbitrate such claims is that arbitration proceedings are generally confidential. The public rarely learns of the allegations made in a confidential arbitration proceeding.

Another reason employers prefer arbitration is that they need not fear a “runaway jury” award. That protection is now gone.

It will be very interesting to see how employers respond to this new law once President Biden signs it. 

Now that employers cannot rely on the confidentiality of arbitration to protect from bad publicity arising from a sexual harassment or sexual assault claim, they will need to be more proactive in protecting employees. 

Employers can no longer ignore red flags or conduct biased investigations. 

Far too often, when an employee complains about sexual harassment, the investigation conducted (if any) is half-hearted at best. Far too often, investigators ignore red flags, do not seek additional evidence, and do not interview witnesses who may have information. 

Now that employers cannot rely on arbitration to protect from large jury verdicts in sexual harassment or sexual assault claims let’s hope that employers take proactive steps to improve the protection of employees.