Inspired by the #MeToo movement, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 significantly limits the Federal Arbitration Act (FAA), which has historically enforced private arbitration agreements. The act now prohibits forced arbitration of sexual assault or sexual harassment claims, irrespective of the context in which they arise. Moreover, if a sexual misconduct victim wants to pursue or participate in a class action based on such conduct, the act empowers nullification of any pre-dispute agreement in which he or she agreed to only pursue claims on his or her own behalf.
Notably, the act is not limited to the employer–employee relationship but applies to any agreement that purports to require that a sexual harassment or sexual assault claim be resolved through arbitration. Going forward, sexual harassment or assault claims may be severed from other claims, with the former proceeding in state, federal, or tribal court, and the latter proceeding in arbitration in parallel. ABA Litigation Section leaders see iron-clad arbitration clauses as a thing of the past in sexual harassment and sexual assault cases and predict that other discrimination claims may get similar treatment in the future.
The FAA is a nearly 100-year-old act of Congress allowing and compelling the judicial enforcement of dispute resolution through private arbitration. Originally enacted to allow for a speedier resolution of disputes, arbitration is frequently utilized in commercial and international disputes. In more recent years, however, mandatory arbitration provisions found their way into myriad employment agreements, nondisclosure agreements, consumer services agreements, separation agreements, and company handbooks, among many others. As mandated by the FAA, courts consistently enforced those arbitration clauses with respect to claims of sexual harassment and sexual assault, thereby preventing those alleged victims from seeking relief in open court.
President Biden signed the act into law in March 2022, codifying a bipartisan effort. The new act gives individuals alleging sexual misconduct the right to proceed in an appropriate court or agency under relevant federal, state, or tribal law. It also authorizes such claimants to nullify pre-dispute joint-action waivers and proceed in a class or collective posture, which may lessen the impact on the aggrieved victim’s costs—typically much higher in a private arbitration than in a state or federal court.The act does not force a sexual harassment or sexual assault claimant to proceed in court; he or she can still choose arbitration to decide the merits of a claim. Given the sensitive and private nature of certain of those claims, some claimants may prefer a private forum where there is less public-facing scrutiny and where the confidentiality of testimony and other evidence can be preserved. But if the claimant wants to shine a light on his or her claims in a public court proceeding, the defendant cannot prevent it. Historically, parties were generally free to agree to allow an arbitrator to decide issues of arbitrability. Under the act, however, a court now serves as the decision-maker regarding its applicability to a particular dispute or to specific parties. The act applies to any dispute or claim that arises or accrues after it was signed into law, so it does not affect any arbitration proceeding that existed prior to March 3, 2022.
The act’s broad net may result in collateral litigation over its meaning and scope. Other claims, such as gender or age discrimination, that are sometimes part of a larger complaint by an aggrieved victim could trigger additional litigation. “It is unclear whether a plaintiff can force those other claims into court by accompanying them with a claim of sexual harassment or assault. The act allows an alleged victim to avoid arbitrating any ‘case’ that ‘relates to’ a sexual harassment or assault dispute, and not just the dispute itself,” explains Henry R. Chalmers, Atlanta, GA, cochair of the Litigation Section’s Alternative Dispute Resolution Committee.
Additionally, a claimant must also now strategically evaluate whether to pursue sexual harassment claims in one forum (arbitration) and non-harassment claims in a second one (state, federal, or tribal courts). Pursuing related, and perhaps overlapping claims, simultaneously in two forums could result in inconsistent or even conflicting factual or legal findings. But by prohibiting mandatory arbitration, the act now gives victims of sexual misconduct the ability to choose the best venue—or venues—when making their strategic decisions.
In a February 2022 Statement of Administration Policy, the Office of Management and Budget stated that “[t]his legislation advances efforts to prevent and address sexual harassment and sexual assault, strengthen rights, protect victims, and promote access to justice.” This goal is reflected in the act’s expansive definitions of “sexual harassment disputes” and “sexual assault disputes.”
The act defines a sexual harassment dispute as one “relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.” Under federal law, “sexual harassment” is broadly defined to include “unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct” when submission to such conduct is a term or condition of an individual’s employment, is the basis for employment decisions, or creates an intimidating, hostile, or offensive working environment. Presumably, courts will use similarly expansive concepts of sexual harassment when considering claims that arise outside the employment context
The act similarly defines a sexual assault dispute as one “involving a nonconsensual sexual act or sexual contact,” as such terms are defined under federal, state, or tribal law, and specifically includes circumstances in which the victim lacks the capacity to consent. Federal law defines “nonconsensual sexual act” and “sexual contact” as the “intentional touching, either directly or through the clothing, of [the private areas] of any person with an intent to abuse, humiliate, harass, degrade, or arouse or gratify the sexual desire of any person.”
Section leaders predict that the legislative grant of autonomy to sexual misconduct victims will ensure they have the opportunity to be fairly and justly heard—be it through arbitration they agree to, or in a state, federal, or tribal court as guaranteed by the act. “The most important objective is to ensure that victims can maintain their voice and sense of agency over actions taken against them,” stresses Rachel Pereira, Washington, DC, cochair of the Section’s Access to Justice Committee. “The statute was drafted purposefully to leave that decision up to the alleged victim,” Chalmers notes.
The act does not require any party to change, redraft, or even edit its current arbitration, class action, or collective-action waiver agreements. “Such agreements are rendered invalid only if the alleged victims elect to invalidate them. If alleged victims want to force compliance with mandatory arbitration agreements, their alleged perpetrators have no choice but to arbitrate,” reiterates Chalmers.
Employers are still beholden to applicable state laws regarding arbitration of employment-based and other claims, observes William E. Weinberger, Los Angeles, CA, cochair of the Section’s Corporate Counsel Committee. The act is likely to incentivize employers to review and revise policies and practices that focus on sexual assault and harassment in the workplace. “The risk that, as written, the law could draw into its ambit cases in which the plaintiff has alleged sexual harassment and other employment claims not related to sexual harassment will be added incentive for employers to strengthen those policies and practices,” Weinberger adds.
New corporate awareness may also bleed into updates to internal company policies and workplace conditions. “Certainly employers will now have to address these incidents completely and engage in high-quality prevention to ensure that work spaces are safe for all,” states Pereira. Employers will likely change the way they address the underlying practices for the better to try to eliminate sexual harassment or sexual assault in their workplace, Pereira predicts.
The act may also motivate employers to address unsafe work environments in order to avoid the increased public attention on such cases. “It may provide a mechanism to ensure that employers understand the severity of such harm and take action to address and prevent [unsafe work environments],” Pereira posits. “The ability of employers to keep sexual harassment and sexual assault claims out of the limelight, which had already been eroded by some state laws, particularly in California, is further impeded by this law,” Weinberger agrees.
Although the act creates a judicial safe haven for claims of sexual harassment and assault, Section leaders see room for similar protections for claims arising from other forms of discrimination and misconduct. “Hopefully, similar amendments will eventually extend to all forms of workplace discrimination, in an effort to give victims of discrimination a voice and ensure that employers do more to eliminate all forms of workplace discrimination,” urges Pereira.
