On February 10, 2022, the Senate passed legislation ending the use of forced arbitration in lawsuits involving sexual assault and harassment claims. The bill – the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act – passed the Senate by a voice vote just days after it passed the House by a vote of 335 to 97. The legislation is now before President Biden, and it is expected that he will sign the bill soon.
This law has been in dispute along partisan lines for nearly a decade, as Republican lawmakers had traditionally opposed the legislation. However, the #MeToo movement, which included claims against some members of Congress in the past, paved the way for lawmakers to find common ground and resolve the partisan gridlock.
The law will take effect immediately upon President Biden’s signature, and it will apply to any and all claims of sexual assault or harassment, as defined under federal, state, or tribal law, that arise or accrue after its enactment. Employers that currently use arbitration clauses to manage sexual assault and harassment claims should take steps to review and amend their practices accordingly and prepare for the potential that current and past allegations of sexual misconduct will become public.
Employers will be prohibited from implementing policies or contracts that funnel assault and harassment cases into private arbitration – meaning claimants have the right to file lawsuits in federal, state, or tribal court, which is open to the public. The law also prohibits employers from using joint-action waivers prohibiting class actions. Therefore, parties are now able to collectively file class action lawsuits alleging widespread sexual assault and/or harassment.
The law raises several new considerations for employers about how to manage claims of sexual assault or harassment. The public nature of filing claims in court elevates the risk of reputational harm for employers, as well as increases liability risk due to the potential for a proceeding before a jury. Due to the elimination of private arbitration for these claims and the increased risks, plaintiffs now have more leverage in settlement negotiations.
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