Congress Ends Arbitration for Employee Related Sexual Assualt and Harassment Claims.

By E. Bryan Paul

Clark, May, Price, Lawley, Duncan & Paul, LLC

On February 10, 2022, Congress passed The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2022. The intent of this law is to end any dispute as to whether the Federal Arbitration  Act, 9 U.S.C. § 1 et seq. (FAA), preempted state laws that sought to prohibit mandatory pre-dispute arbitration of employee sexual harassment claims. The law amends the FAA and invalidates pre-dispute arbitration agreements between employers and employees that would obligate the parties to arbitrate claims of sexual assault or sexual harassment. It is expected that President Biden’s will sign the Act into law in the coming weeks.   

It is the desire of Congress and the President that these cases be litigated in open Court, rather than arbitration. Should both parties consent to the process, they could still arbitrate the claims.

This is a significant development for employers and insurers alike. One of the positive aspects of arbitration is that it enables employers to avoid the unpredictability of jury trials while reducing the cost and expense of litigation.  Insurers and employers should take this into account when considering the potential costs of such claims. Arbitration agreements remain valid as to all other forms of discrimination. 

Given this development, Employee Arbitration Agreements need to be revised to take into consideration this new law. This new development reinforces the need for strong and updated handbooks, and Employers taking prompt and remedial action when a complaint of harassment is made.