Bill Passed Canceling Workplace Sexual Harassment Arbitration
Last week, Congress passed a transformative bill inspired by the #MeToo movement that would allow employees to avoid the application of pre-dispute arbitration agreements in cases of sexual assault or workplace harassment. The bill, which has significant implications for employers, is expected to be signed into law by President Biden.
APPLICATION AND REQUIREMENTS OF THE BILL
The Sexual Assault and Sexual Harassment Forced Arbitration Act of 2021 (HR 4445), passed by the United States House of Representatives on February 7, 2022 and by the United States Senate on February 10, would amend federal law on (FAA) to allow an employee alleging sexual assault or harassment to invalidate a pre-dispute arbitration agreement or joint action waiver. In other words, if an employee signs an agreement to arbitrate for employment-related claims and later experiences sexual assault or harassment, the employee can choose to opt out of that agreement to arbitrate and pursue their claims in court. Likewise, if an employee has agreed to pursue claims only individually, and not as a member of a class action, the employee may waive that agreement and pursue claims on a joint basis with other alleged victims.
Employees who have signed pre-dispute arbitration or joint action waiver agreements can still elect to arbitrate such claims if they prefer, but the decision will be solely theirs. The legislation would also explicitly require courts, rather than arbitrators, to determine whether HR 4445 applies to a particular claim, whether or not the agreement in question delegates that power to an arbitrator.
It is important to note that the bill would not apply retroactively. It states that it will apply only to “any dispute or claim arising or arising from the date of enactment”. However, it could still invalidate pre-dispute agreements made before it was passed.
The legislation would cover all claims of sexual assault or harassment, whether they arise under federal, state, local or tribal law.1 “Sexual Assault” is defined as a non-consensual sexual act or sexual contact, as those terms are defined in Section 2246 of Title 18 (the U.S. Penal Code) or similar applicable state or tribal law, including where the victim does not have the capacity to consent. “Sexual harassment” is defined as “behavior that is presumed to constitute sexual harassment under applicable federal, tribal, or state law” – meaning it covers anything that would qualify as sexual harassment under Title VII of the Civil Rights Act of 1964 (Title VII).
Under Title VII, sexual harassment is unwelcome conduct based on sex (including sexual orientation, gender identity, or pregnancy) where enduring the offensive conduct becomes a condition of continued employment, or the conduct is serious or pervasive enough to create a work environment that a reasonable person would consider intimidating, hostile or abusive.2
Public pressure to give victims the freedom to publicly pursue their claims in court despite prior arbitration agreements has grown in recent years, and this is not the first such law. Other states, including New York, have passed laws prohibiting forced arbitration of sexual assault and harassment claims. California also passed a law prohibiting employers from requiring the performance of arbitration agreements as a condition of employment. Indeed, Senate Majority Leader Chuck Schumer (D – New York) called the legislation “long overdue.”3
President Biden has voiced his support for the bill and looks set to sign it. And in an administrative policy statement released Feb. 1, White House officials said the bill could be a model for addressing forced arbitration for other claims “including arbitration of claims regarding the discrimination based on race, wage theft and unfair labor practices”. .”
In the short term, this legislation, described by Senator Schumer as “one of the most significant changes to labor law in years”,4 will have significant implications for employers. It is estimated that more than 60 million Americans are currently subject to mandatory arbitration clauses in the workplace.5
Employers may want to start reassessing their employment contracts and preparing for the likelihood that claims of sexual assault and harassment will no longer be subject to mandatory arbitration. We also advise keeping an eye on expected litigation regarding HR 4445, which should provide some clarity on the scope and application of the bill.
For example, it remains to be seen how the courts will interpret when a “dispute or claim” “arise or accumulate”. Will it be when the sexual assault or harassment first occurs or when the employee files a complaint? Another open question is whether employers will be required to notify employees of their right to waive arbitration clauses or joint action waivers and, if so, how and when such notice must be provided. It will also be interesting to see how this bill will interact with confidentiality, non-disparagement, and other common clauses included in employment contracts, and whether it will apply to cases involving other employment-related claims. employment which are always subject to compulsory arbitration. In other words, if an employee files a sexual harassment complaint and a racial discrimination complaint, can both complaints be taken to court under HR 4445 or will they have to be pursued separately, one in court, the other in arbitration?
Now is also a good time for employers to review anti-harassment training policies, procedures and programs, which may not have been updated during the COVID-19 pandemic. The U.S. Equal Employment Opportunity Commission, which is the federal agency responsible for federal laws that prohibit discrimination against employees because of their gender, among other legally protected characteristics, says prevention is the “best tool to eliminate harassment in the workplace”. and encourages employers to implement effective complaint or grievance processes, provide anti-harassment training to their managers and employees, and take immediate and appropriate action whenever an employee complains.6 Indeed, employers should seek to eliminate all harassment, even when it does not meet the legal definition mentioned above, as such behavior could be the subject of a complaint and could have a negative impact on the workplace. work in many other ways.