New Law Bans Forced Arbitration in Sexual Misconduct Cases
Workspan Daily
February 16, 2022

The U.S. Senate moved forward with a significant piece of employment law legislation, passing a bill on Feb. 10 that would end forced arbitration for workers who are victims of sexual assault and harassment. 

The legislation, which passed unanimously by a voice vote (335 to 97) after garnering overwhelming bipartisan support in the House of Representatives, heads to President Joe Biden’s desk to be signed into law. Under the legislation, employers will be prohibited from forcing workers to settle sexual misconduct claims in closed-door arbitration venues. Employees instead would be able to file suit in court with their own legal representation.

“This is among the largest workplace reforms, certainly in our lifetimes,” Sen. Kirsten Gillibrand, D-N.Y., who sponsored the legislation, told reporters afterward.

It’s estimated that more than 60 million U.S. workers are subject to forced arbitration clauses in their employment contracts, which also includes discrimination and pay disparity claims. However, the language in such employment contracts aren’t always transparent and often communicated in the fine print.

The legislation's ban on forced arbitration would kick in immediately, and apply retroactively to previous resolved claims unless a case is pending. It also applies to consumers who approve terms of agreement in exchange for using products, such as ride sharing services.

The bill received support from numerous congressional Republicans, including Sen. Lindsey Graham of South Carolina and Rep. Morgan Griffith of Virginia.

“I believe that this is a good bill, a righteous bill, a just bill,” Griffith said. “When you start talking about sexual assault and sexual harassment, nobody goes into a new employment thinking, ‘Well, I better double check all the fine print and make sure there’s nothing in there that would allow me to be sexually harassed or sexually abused.’”

Several companies have already banned forced arbitration for sexual harassment in recent years, including Facebook, Lyft, Microsoft, Uber and Wells Fargo. U.S. workers would still have the option of going the arbitration route after the bill is signed into law.

FortneyScott LLC noted that employers are not required to revise their existing arbitration agreements, as the legislation removes sexual harassment and sexual assault claims from the Federal Arbitration Act. However, the Washington D.C.-based employment law firm noted that employers should still review their arbitration agreements and consider carving out sexual harassment and sexual assault claims from new and existing arbitration agreements.

“With the passage of HR 4445 and with similar moves in various states, this would also be a good time for employers to reconsider their approach to mandatory arbitration for racial, disability, national origin, or other types of discrimination and harassment claims and determine whether their current mandatory arbitration policy still aligns with their company’s objectives after #MeToo and #BlackLivesMatter,” the firm wrote in a release.

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