The “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (the “Act”) is expected to be enacted into law in the next couple of days. Last month, the Act was passed by both the House and the Senate. All that is left is for President Biden to sign the Act into law.

Once enacted, the Act will amend the Federal Arbitration Act to render unenforceable—at an employee’s election—any pre-dispute arbitration agreement that requires the employee to arbitrate disputes related to sexual assault or harassment claims. Such claims may include a non-consensual sexual act or sexual contact, as defined under state and federal law, including when the victim lacks the capacity to consent; unwelcome sexual advances; unwanted physical contact that is sexual in nature; assault; unwanted sexual attention; unwanted sexual comments and propositions for sexual activity; conditioning professional, educational, consumer, health care, or long-term care benefits on sexual activity; and retaliation for rejecting unwanted sexual attention.

The Act will impact:

  1. Agreements to arbitrate a dispute that had not yet arisen at the time of the making of the agreement; and
  2. Agreements that prohibit, or waive the right of, a party 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.

The Act will apply to those agreements regardless of whether the sexual assault or harassment claims at issue arise under federal, state, local, or tribal law. Because of the Act’s use of the term “pre-dispute,” arbitration agreements entered into after sexual assault or harassment claims arose would fall outside the ambit of the Act.

Although the Act is not retroactive, it will apply “to any dispute or claim that arises or accrues on or after the date of enactment of this Act.” Based on this language, the application of the Act depends on the date the claim or dispute arose or accrues—not the date of the agreement. This means, once the Act is enacted, an employee may forego an arbitration agreement entered into before or after the enactment of the Act to bring sexual assault or harassment claims in court that arose or accrued after the enactment of the Act. Employers therefore cannot avoid this Act simply because an arbitration agreement is entered into before the enactment of the Act.

Other noteworthy aspects of the Act:

  • Courts must decide whether a claim constitutes sexual assault or sexual harassment regardless of any delegation provision that delegates such decision to an arbitrator;
  • Arbitration agreements covered by the Act may only be deemed not valid or enforceable under the Act at an employee’s election. So unless an employee elects to forego the applicable arbitration agreement, the sexual assault and harassment claims may still be arbitrated; and
  • Arbitrations agreement and arbitrations of disputes that do not involve claims of sexual assault or harassment are not impacted by the Act.

Takeaways for Employers

Because President Biden is not expected to oppose the Act in light of a White House Statement of Administration Policy that supported the Act, the question is not if the Act will be enacted, but when. In the meantime, employers should review and revise their current agreements to include carve-outs for sexual assault and harassment claims under the Act. At the same time, employers may also want to consider adding or revising choice of law and choice of forum provisions for such claims in case an employee elects to bring such claims in court.