Bipartisan Bill Bans Forced Arbitration of Sexual Harassment Cases

In a substantial bipartisan effort, the House and Senate have passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, and it now moves on to the President's office. This bill is an effort to create a fairer system for handling sexual assault and misconduct claims in the workplace. Read on to learn about forced arbitration, what the bill entails, and how it might affect your organization.

*This article has been updated to reflect President Biden having signed the bill into action on March 3, 2022.

What is Forced Arbitration?

When conflict arises at a workplace or within an organization, a forced arbitration clause in an employee contract may dictate that the issue be sent to a third-party arbitrator who will determine the outcome. The issue with this process is that it is, as the name suggests, forced. Forced arbitration revokes an employee's right to take any conflict with an organization to court.

Organizations will send any disputes directly to the arbitrator, whose decisions and methods are met with little to no oversight and whose ruling is final.

The arbitration process involves a neutral party taking testimony, gathering evidence to support the claim, and ultimately reaching a verdict. The process can be cheaper than litigation overall, however, it can still cost the employee money. Often, if an individual files a claim and wishes to initiate the process, they are met with fees that can create a significant expense.

In addition, there is no judge, court, or jury to allow for an appeal which limits any recourse for the employee.

What is in the Ending Forced Arbitration Bill?

The bill essentially says that even if an employee signs an arbitration agreement from their employer, they are still eligible to take any sexual harassment or assault claims to the court system. They can go to court, initiate arbitration, or even both if they wish. The purpose of this bill will be to end a process that often protects employers from litigation and causes workplace misconduct issues to go underreported. It is important to note that this bill only applies to sexual harassment or assault claims and that any other claims may still be subject to forced arbitration at this time.

The bill also includes any sexual harassment or assault charges brought about in joint-action or class action. According to AP news, “the bill is retroactive, nullifying [arbitration] language in contracts nationwide and opening the door for people who had been bound by it to take legal action.” The bill, which held overwhelming bipartisan support, passed in both the House and the Senate and was signed into law by President Biden on March 3, 2022.

What Does the Bill Mean for Employers?

While employees can now take matters to court for qualified grievances, they still have the opportunity to pursue arbitration if they wish. Employers need to be prepared for either of these scenarios from a compliance standpoint.

It is also crucial for employers to remember that some states have already adopted arbitration bans, including New York and California. Many large companies in these states have already ended their arbitration agreements and it is important that your organization update its policies to cooperate with any state and federal laws.

As a next step, organizations should begin proactively revising all arbitration materials to reflect these new changes. If current clauses in your conflict resolution procedures reference arbitration, you should make sure that you update these procedures to reflect current policies. In addition, make sure to inform your employees of the changes and ensure that they know their rights under the new measure.