By: Ty Hyderally, Esq., Francine Foner, Esq., and Tom Daly

This February, the U.S. House of Representatives passed, and the U.S. Senate approved, a bill to amend the Federal Arbitration Act (FAA) to invalidate clauses in employment agreements requiring employees to arbitrate claims of sexual assault or sexual harassment. President Biden signed the bill into law on March 3, 2022, making it illegal to compel an employee to arbitrate a claim of sexual assault or sexual harassment.

The new law, “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (EFASASHA), bans mandatory arbitration of sexual assault or harassment claims, as well as claims of retaliation stemming from complaints of sexual assault or harassment. U.S. Senator Kirsten Gillibrand (D-NY) originally introduced the legislation in 2017, and reintroduced it last year alongside Senate co-lead, Senator Lindsey Graham. During Senate review, Gillibrand was quoted as saying “This bill is one of the most significant workplace reforms in the last 50 years and is a major step forward toward changing a system that uses secrecy to protect perpetrators and silence survivors.” The Senator continued, “The [bill] will void existing forced arbitration agreements for sexual harassment and sexual assault and end their use. It will give survivors their day in court, allow them to discuss their cases publicly and end the days of institutional protection for harassers.” The bill’s passage and signing are regarded as a major civil rights win for Gillibrand, who appeared alongside former Fox News anchor Gretchen Carlson after the bill’s approval by the Senate in mid-February. Carlson raised sexual harassment allegations against her former employer and boss Roger Ailes just three weeks before her termination from the news network and became a forceful advocate against mandatory arbitration.

EFASASHA provides that a pre-dispute arbitration agreement or a pre-dispute joint-action waiver may now be invalidated by the person alleging conduct rising to sexual assault or sexual harassment. In other words, employees who have signed agreements to arbitrate employment-related claims may now unilaterally dispense with the provisions requiring arbitration for allegations of sexual assault and sexual harassment. Further, employees may also unilaterally dispense with any provision waiving their right to pursue sexual assault and sexual harassment claims through joint-action. The law still allows claimants the option to voluntarily arbitrate claims of sexual harassment or sexual assault, though it now prohibits compulsory arbitration instead of pursuing these actions in federal, state, or tribunal courts.

While state adoption of similar legislation is lagging, several states have already passed laws limiting mandatory arbitration provisions in employment contracts as they pertain to sexual harassment claims. New Jersey and New York, along with California, Maryland, Vermont, and Washington, are among them. Some of these state laws were challenged as being preempted by the FAA, claims which the new EFASASHA now partially moots. New Jersey, in particular, amended the New Jersey Law Against Discrimination (NJLAD) in March of 2019, to restrict the abilities of employers to keep confidential the details of claims of discrimination, retaliation and harassment. The 2019 amendment (P.L.2019, c.39; N.J.S.A. § 10:5-12.7) also deemed any employment contract (aside from collective bargaining agreements) to be against public policy if it contained a waiver of any substantive or procedural right relating to a claim of discrimination, retaliation or harassment. Employment law experts saw the amendment as limiting an employer’s ability to compel arbitration of NJLAD claims, but noted that the ban was likely to be challenged due to the FAA.

While EFASASHA is a profound step forward in protecting an employee’s right to a jury trial for claims of sexual harassment or sexual assault, mandatory arbitration remains lawful for other types of employment disputes.  In addition, sexual assault and harassment claims that were resolved prior to enactment of EFASASHA are not disturbed.

The current law had been endorsed by American Association for Justice (AAJ), Public Citizen, the National Women’s Law Center, the National Partnership for Women & Families, Futures Without Violence, Jewish Women International, Lift Our Voices, National Alliance to End Sexual Violence, National Center on Domestic and Sexual Violence, National Coalition Against Domestic Violence, National Domestic Violence Hotline, National Network to End Domestic Violence, RAINN, RALIANCE, and Sexual Violence Prevention Association.

Hopefully, this legislation is just a first step toward federal legislation eliminating mandatory arbitration for all types of employment discrimination and retaliation claims.

Read the full text of the EFASASHA here: https://www.congress.gov/117/plaws/publ90/PLAW-117publ90.pdf

En nuestra firma hablamos español. This blog is for informational purposes only.  It does not constitute legal advice and may not reasonably be relied upon as such.  If you face a legal issue, you should consult a qualified attorney for independent legal advice with regard to your particular set of facts.  This blog may constitute attorney advertising.  This blog is not intended to communicate with anyone in a state or other jurisdiction where such a blog may fail to comply with all laws and ethical rules of that state of jurisdiction.