In a previous blog, we have discussed the matter of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021. When it was discussed, it was recently passed by Congress and was waiting for President Joe Biden’s approval. As of March 3rd, the Act is officially law. What does this mean and what are some key points that the law now makes?
As we talked about before, the main point of the bill came out of the #MeToo movement. In the past few years, the Supreme Court has issued a number of rulings that strengthened the power arbitration clauses in an employment contract. Essentially, the high court opined that arbitration clauses were enforceable and could also limit workers’ rights to class action suits.
Surely, the new Act is also a reaction to that. Now, arbitration agreements cannot be enforced if the claimant brings a sexual harassment or sexual assault claim. Employees can now go to court against their employers if there was a pre-dispute agreement that barred employees from going to court
What are some key takeaways?
An important thing to note is that the Act does not invalidate every arbitration agreement. Here is what the new law does:
- The Act applies to all claims of sexual assault or sexual harassment that arise or accrue after March 3, 2022, regardless of the date of the agreement at issue.
- The Act gives employees the option to invalidate arbitration agreements and class or collective action waivers with respect to sexual assault and sexual harassment claims. This means employees who have signed arbitration agreements now have the option to choose to arbitrate these claims or pursue them in court regardless of their contractual agreements with their employers.
- The Act does not affect arbitration agreements with respect to claims unrelated to sexual assault or sexual harassment.
The federal government was not in the vanguard of a push to limit a Company’s rights. Many states have recently enacted their own laws that address this kind of thing. New York enacted a similar law recently. California has effectively done away with non-compete/non-solicitation clauses for employment contracts. And, Illinois has significantly limited non-compete clauses and requires that companies give an employee 21 days to review any severance/settlement agreement before waiver any type of discrimination or harassment claim.
What does this mean for employers?
Employers should also keep an eye out for changes in arbitration agreements that relate to race and gender, as President Biden has discussed extending the Act into those two areas. When we know more, so will you.
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If you want to look more closely into the new law, here is the link
