New Law Bans Mandatory Arbitration of Sexual Assault and Sexual Harassment Claims

Author: David B. Weisenfeld

March 4, 2022

President Biden has signed a landmark law that eliminates the use of mandatory arbitration clauses by employers in cases of sexual assault and sexual harassment.

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 is a direct response to the #MeToo movement, and gives sexual assault or harassment victims the right to file a lawsuit in state, tribal or federal court, even if they had signed an employment pre-dispute arbitration agreement or waiver barring such lawsuits.

Former Fox News anchor Gretchen Carlson helped lead the push for the law, and explained that secrecy abounds with mandatory arbitration agreements because they typically restrict sexual harassment victims from speaking out.

It is estimated that more than 60 million US employees are subject to mandatory arbitration clauses. Proponents of the bill, including Carlson, claim these clauses are often listed in fine print, leaving many workers unaware they have signed them.

"For too long, enforcement of pre-dispute mandatory arbitration agreements has served as a potential barrier to justice for individuals who have suffered assault or harassment at work," said EEOC Chair Charlotte A. Burrows in a statement.

Anthony Oncidi, co-chair of Proskauer's labor and employment department, told XpertHR there is no question the law will lead to an uptick in the number of class actions and sexual harassment/assault cases filed in courts around the country. "It's safe to say there will perhaps be millions of new lawsuits that would not have been filed without this legislation."

Since the new law is limited to sexual harassment and sexual assault claims, other workplace disputes would still be subject to arbitration agreements under the Federal Arbitration Act. The Supreme Court has consistently upheld mandatory arbitration agreements as a condition of employment and many employers make use of them. But Oncidi suggested that this law will change the landscape for employers.

"It's hard to comprehend why someone who claims to have been sexually harassed is free to go to court, but someone else (or potentially even the same employee) who claims to have been harassed based upon their age, disability, race or sexual orientation is barred from court and must arbitrate their claims," he said.

Oncidi added that many private employers may ultimately end up revoking their arbitration agreements with respect to all forms of illegal harassment and discrimination. Since the new measure alters federal law, Oncidi said he expects it to survive any challenge in the courts.