As anticipated, on March 3, 2022, President Biden signed The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (H.R. 4445). The law takes effect immediately.
As explained in our prior blog, in a rare display of bipartisanship, on February 7, 2022, the House of Representatives overwhelmingly approved H.R. 4445 by a vote of 335 to 97. A few days later, on February 10, 2022, the Senate passed H.R. 4445, without amendment, by voice vote.
Substance of the New Law
The new law adds Chapter 4 to the Federal Arbitration Act. The law allows a person alleging conduct constituting a sexual harassment or assault dispute under state or federal law, or the named representative in a class or collective action alleging such conduct, to elect to invalidate a pre-dispute arbitration agreement or joint-action waiver with respect to a case that relates to the sexual harassment or assault dispute.
Importantly, the new law only applies to pre-dispute arbitration agreements and joint-action waivers. It does not impact agreements to arbitrate sexual harassment or assault disputes that parties enter into after a dispute arises. And the law does not make void any arbitration provision that covers sexual harassment and/or assault claims.
The new law will also only apply to disputes that arise or accrue on or after March 3, 2022. In other words, the new law does not apply to conduct constituting sexual harassment or assault that occurred prior to March 3, 2022.
Any issue as to whether the new Chapter 4 applies with respect to a dispute shall be determined under federal law. And, a court, not an arbitrator, shall determine whether the new law applies to a dispute and the validity and enforceability of an agreement to arbitrate that falls within the scope of the new law.
What Should Employers Do?
It is currently unclear how H.R. 4445 will be construed by the courts. Employers must be aware of this new law and understand the impact it could have on existing arbitration agreements or policies. To do so, employers should consult with experienced labor and employment counsel to explore potential changes to their existing arbitration agreements or policies to take into account H.R. 4445.