On March 3, 2022, President Biden signed into law the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (also known as H.R. 4445). H.R. 4445 amends the Federal Arbitration Act (“FAA”) to prohibit employers from entering into pre-dispute arbitration agreements for claims alleging sexual assault or sexual harassment. It also prohibits employers from including waivers of the right to bring such claims on a joint or class basis.
Impact of H.R. 4445 for Employers
For years, many employers have used mandatory arbitration agreements for employment-related claims, including class action waivers. These have been permissible and enforceable under the FAA. H.R. 4445 seeks to change that by allowing victims of sexual assault or sexual harassment to have their claims adjudicated in court rather than the more confidential setting of private arbitration.
Specifically, H.R. 4445 amends the FAA, as follows:
Employers should review existing pre-dispute arbitration agreements to determine whether revisions may be needed in light of the new law. This could include adding carve-outs for sexual assault or sexual harassment claims or language that expressly provides the employee’s rights to elect to bring sexual assault or sexual harassment disputes in court or arbitration, or making other updates to ensure that the agreement can be enforced as to other types of claims.
Employers should also keep an eye out as to whether the Ninth Circuit grants a petition for rehearing en banc after a divided Ninth Circuit panel found the Federal Arbitration Act did not completely preempt Assembly Bill 51, California’s ban on mandatory arbitration agreements. But note, last month the Ninth Circuit issued an order deferring consideration of the petition until the U.S. Supreme Court rules on Viking River Cruises, Inc. v. Moriana – oral argument has been scheduled for later this month (March 30, 2022).
Should you have any questions or require assistance to comply with this new law, feel free to reach out to us.
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