New Federal Law Allows Plaintiffs to Bring Sexual Abuse and Sexual Harassment Claims in Court, Despite Mandatory Arbitration Agreements

On February 10, 2021, the Senate passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, H.R. 4445 (“Law”), with bipartisan support.  The Law was signed by President Biden and took effect on March 3, 2022.  The Law amends Chapter 4 of the Federal Arbitration Act to exclude sexual harassment or assault claims from an otherwise mandatory arbitration agreement.  Employees who agree to arbitration will therefore be permitted to litigate claims of sexual harassment and/or sexual assault.

Sexual harassment disputes are broadly defined as a dispute “relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.”

It defines sexual assault disputes as disputes “involving a nonconsensual sexual act or sexual contact, as such terms are defined in section 2246 of title 18 or similar applicable Tribal or State law, including when the victim lacks capacity to consent.”  Section 2246 is a federal statute defining “sexual act” and “sexual contact” as used in criminal sexual abuse statutes.

Keep in mind that in California, contractors as well as employees are protected under the laws prohibiting workplace harassment.  As a result, contractors can bring claims for sexual harassment under the Fair Employment and Housing Act and, under the Law, may be entitled to litigate such claims in court, even if the agreement with the contractor contains an arbitration provision.

Notably, the Law does not invalidate arbitration agreements that include all types of claims within their scope, nor does it absolutely prohibit arbitration of sexual assault or sexual harassment claims.  Instead, it allows plaintiffs to choose whether to arbitrate or litigate sexual assault or sexual harassment claims.  The Law also does not impact agreements to arbitrate non-sexual assault or sexual harassment claims, which can result in multiple proceedings where covered and non-covered claims are brought together—sexual assault and/or sexual harassment claims proceeding in court while other claims proceed in arbitration.  Accordingly, businesses need not expressly exclude disputes involving sexual assault or discrimination from their arbitration agreements, but they may opt to add language to the arbitration agreement confirming that individuals have a choice to litigate sexual harassment and assault claims in court.

The Law also excludes sexual harassment and assault claims from the scope of a delegation clause, meaning that whether a claim falls within the scope of the Law must be determined by a court rather than an arbitrator.

Finally, the Law has no retroactive application.  The Law will not apply to sexual harassment or assault disputes based on conduct that occurred before March 3, 2022, where the parties have signed an enforceable arbitration agreement.