Jobs can no longer force you into arbitration for sexual assault cases. What it means
A new bill barring employers from compelling sexual assault cases into arbitration is heading to the president’s desk after a bipartisan push in both houses of Congress.
Arbitration is the process by which two parties agree to settle a dispute outside of court through a neutral third party. It’s a common provision in both consumer and employment agreements, but sexual abuse survivors have long said the process is harmfully “secretive” and benefits the perpetrators, The New York Times reported.
The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, a six-page bill that passed unanimously in the Senate on Feb. 10, aims to change that.
It amends the Federal Arbitration Act, which employers previously used to compel workers to arbitrate claims of sexual assault or harassment in the workplace.
“The law would dramatically change the landscape for employer arbitration agreements and class or joint-action waivers in relation to sexual harassment-related disputes,” the law firm Thompson Coburn LLP said. “It would ultimately make mandatory arbitration agreements unenforceable with regard to sexual assault and harassment disputes.”
Here’s a look at what the act says, according to employment experts at major law firms across the U.S.
How does the act define sexual assault and sexual harassment
The act defines what constitutes a sexual assault dispute “relatively narrowly,” according to Sullivan and Cromwell LLP.
As written, a sexual assault dispute involves a “non-consensual sexual act or sexual contact as such terms are defined in [the U.S. Criminal Code] or similar applicable Tribal or State law, including when the victim lacks capacity to consent.”
A sexual harassment dispute, by comparison, is defined as “conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.”
Does the act apply retroactively?
Yes. According to the law firm of Vorys, Sater, Seymour and Pease LLP, the law would invalidate any arbitration agreement as it relates to sexual assault or harassment entered before the bill was passed.
“As such, if an employee brings a claim for sexual harassment or sexual assault that occurred after February 10, then a mandatory arbitration provision will not be enforceable, even if the provision was entered into before February 10 and would otherwise have been enforceable prior to the new law taking effect,” Vorys said.
What about pending sexual assault cases?
No, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act does not apply to pending cases, Thompson Coburn said.
It only applies to claims that arise after the president signs the bill into law, regardless of when the arbitration agreement was reached, according to the law firm.
Eric B. Meyer, an attorney at FisherBroyles LLP, said the same in his blog, The Employer Handbook.
“Should the Bill become law, it will apply to any dispute or claim that arises or accrues on or after the law takes effect. So any pending arbitrations will remain there,” Meyer said. “Plus, any signed arbitration agreement you have still has some shelf life for future sexual harassment/sexual assault claims until the new law takes effect.”
However, some cases that may have been previously adjudicated under individual arbitration have the possibility to reemerge as part of a class or collection action, Sullivan Cromwell noted.
That’s because the law bars employers from enforcing class or collective action waivers that relate to sexual assault or harassment.
What types of disputes aren’t included?
The law is limited to disputes stemming from sexual harassment or assault. According to the Chicago-based law firm Franczek P.C., that means it “does not apply to sex discrimination, or harassment or assault based on a protected status other than sex.”
“The proposed law does not stop employers from requiring non-disclosure agreements or affect mandatory arbitration for other types of employment related lawsuits where the plaintiff or named representative of the class alleges conduct unrelated to sexual harassment or sexual assault,” Franczek said.
Meyer said employers can therefore still enforce arbitration agreements related to other employment disputes, such as “sex discrimination that (doesn’t) involve unwanted sexual advances, physical contact, comments, or quid pro quo claims.”
Sexual assault or harassment claims aren’t always brought alone and can be raised in conjunction with other claims, including retaliation. According to Thompson Coburn, it wasn’t yet clear how the law will apply to those more complicated cases.
“The statute could be read to mean that all claims, not only the sexual harassment/assault claims, must be resolved in court,” the law firm said. “Such a reading could be utilized as a tool to obtain a jury trial over otherwise arbitrable claims by simply including a sexual harassment or sexual assault claim in a lawsuit.”
Sullivan Cromwell, however, said nothing in the law’s wording precludes a company from compelling arbitration on all other cases other than those involving sexual assault or harassment.
Can sexual assault victims still choose arbitration?
Yes, according to the law firm Ogletree Deakins, an employee can still agree to arbitrate their sexual assault or harassment case after it arises.
The law is structured such that it’s the accusing party’s choice whether to “bring the claim to court or keep it in arbitration,” said Thompson Coburn.
As Meyer said in his blog: “In plain English, if my employer requires me to sign an arbitration agreement and someone later sexually assaults/harasses me, I can arbitrate my claims if I want. Or I can sue in court under state or federal law or both. It’s entirely up to me.”
