The House and Senate passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (The Act), which will go into effect once signed by the President. The law will ban forced arbitration and class action waivers for all claims regarding sexual assault and sexual harassment. It will also expand the original Senate version, which limited what was defined as sexual harassment. The version passed covers all sexual harassment causes known. 

Overview of The Act 

Below is an excerpt to provide further insight into what is covered by The Act:

§401. Definitions

In this chapter:

(1) PREDISPUTE ARBITRATION AGREEMENT.—The term ‘predispute arbitration agreement’ means any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement.

(2) PREDISPUTE JOINT-ACTION WAIVER.—The term ‘predispute joint-action waiver’ means an agreement, whether or not part of a predispute arbitration agreement, that would prohibit, or waive the right of, one of the parties to the agreement to participate in a joint, class, or collective action in a judicial, arbitral, administrative, or other forum, concerning a dispute that has not yet arisen at the time of the making of the agreement.

(3) SEXUAL ASSAULT DISPUTE.—The term ‘sexual assault dispute’ means a dispute involving a nonconsensual sexual act or sexual contact, as such terms are defined in section 2246 of title 18 or similar applicable Tribal or State law, including when the victim lacks capacity to consent.

(4) SEXUAL HARASSMENT DISPUTE.—The term ‘sexual harassment dispute’ means a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.

§402. No validity or enforceability

(a) In General.—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.

(b) Determination Of Applicability.—An issue as to whether this chapter applies with respect to a dispute shall be determined under Federal law. The applicability of this chapter to an agreement to arbitrate and the validity and enforceability of an agreement to which this chapter applies shall be determined by a court, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement, and irrespective of whether the agreement purports to delegate such determinations to an arbitrator.”.

It is important to note that The Act does not apply to sex discrimination that is not harassment, including but not limited to, termination, suspension without pay, denial of promotion, or failure to hire where sexual favors are not requested. The Act does apply to harassment due to gender, harassment due to sexual orientation, as well as harassment when sexual favors are requested. Harassment regarding gender or sexual orientation is classified as sexual harassment under Title VII and under some state laws. 

Effect of Banning Forced Arbitration 

Forced arbitration was originally implemented as a way to provide both parties an expedited way to resolve cases, with arbitrators being experienced in specialized subject matters. However, one of the concerns being addressed by The Act was the notion that some arbitrators could potentially be biased in situations where large-scale arbitration companies contract with corporations to be the arbitration forum used in employment disputes.  In those situations, even though the involved parties select their arbitrator from panel members and can veto others, there was a concern that arbitrator panels could be skewed to take a more pro-employer perspective.  In this regard, the banning of forced arbitration in these particular cases was considered a way in which the process could be a more unbiased, neutral way to handle sexual assault and sexual harassment claims. 

Learn More With the Employment Law Attorneys at Eccleston and Wolf

At Eccleston & Wolf, our attorneys have extensive experience representing employers throughout varied industries in employment claims across Maryland, Washington D.C. and Virginia. If your business has questions or concerns regarding employment-related claims, contact your local Eccleston & Wolf office to see how we can assist you.