Biden Signs the Ending Forced Arbitrations Act

Yesterday, President Biden signed into law a bill that renders voidable all mandatory arbitration clauses that pertain to claims of sexual harassment or sexual assault. The law takes effect immediately.

The law, the "Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021,” represents the first significant amendment to the Federal Arbitration Act in decades. The Federal Arbitration Act ensures the enforceability of a wide range of written arbitration agreements, which previously encompassed most employment disputes. The Ending Forced Arbitration Act now enables employees to void mandatory arbitration agreements insofar as they pertain to claims of sexual harassment or sexual assault. It takes immediate effect and applies to any dispute or claim that arises or accrues on or after the date of its enactment.

This new law is a rare product of bipartisan Congressional support and gained momentum through the “Me Too” movement. Proponents of the law asserted that employees who experienced sexual harassment or sexual assault were being deprived of the ability to publicly resolve their disputes through the courts, and were instead forced to privately resolve their disputes through arbitration. The new law will allow an employee who asserts a sexual harassment or sexual assault claim to litigate their claim publicly in court, whereas any remaining claims may be severed and kept in arbitration. Employment disputes that do not involve allegations of sexual assault or sexual harassment are unaffected by this legislation.

The law also impacts class actions that involve sexual harassment or sexual assault disputes. The named representative of a putative class action that alleges sexual harassment or sexual assault now has the option to void any agreements that waived the right to participate in a class action.

The enactment of this law represents an appropriate time for employers to review their existing arbitration and employment agreements, and Nyemaster Goode’s Labor and Employment attorneys are ready to review these issues with you.