President Biden signed into law a significant new piece of federal legislation that allows employees to avoid enforcement of any pre-dispute agreement that would require employees to arbitrate sexual assault or harassment claims.

On March 3, 2022, the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” was signed into law.  The new law amends the Federal Arbitration Act, Title 9 of the U.S. Code.

The Act provides that arbitration agreements covering sexual assault and sexual harassment claims under state and federal law are unenforceable at the election of the person or class representative asserting the claim.  The law applies at the election of the claimant, and it does not automatically void or invalidate arbitration agreements relating to such claims absent the claimant’s election.

The Equal Employment Opportunity Commission has applauded the passage of the new law. “I am delighted that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act has become law,” said EEOC Chair Charlotte A. Burrows. “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.”

The law applies to (1) “pre-dispute arbitration agreements,” meaning any agreement to arbitrate a dispute that has not yet arisen at the time of the making of the agreement, and (2) “pre-dispute joint-action waivers,” meaning an 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 concerning a dispute that has not yet arisen at the time of the making of the agreement.  The law does not impact agreements to arbitrate disputes relating to sexual assault and sexual harassment that parties enter into after a dispute arises.

If there is an issue as to whether the Act applies with respect to a particular dispute, the law provides that the validity and enforceability of the arbitration agreement in such cases shall be determined under federal law, and shall be determined by a court, rather than an arbitrator, irrespective of whether the agreement purports to delegate such determinations to an arbitrator.

The law takes effect immediately and applies to all existing arbitration agreements.  However, it only applies with respect to disputes and claims that arise or accrue on or after the date of enactment.  The new law does not retroactively apply to claims that arose prior to March 3, 2022.

If you have any questions regarding this amendment to the FAA or your company’s arbitration agreements, please contact your labor and employment counsel at Smith, Gambrell & Russell, LLP.