President Biden is expected to sign into law the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” The law would prohibit employers from including mandatory arbitration clauses in employee handbooks, offer letters, and contracts that would apply to claims of sexual harassment or assault. A few key things to note:
- The law is retroactive in the sense that if an employee has a claim in the future, a previously-signed arbitration agreement would not be enforceable as to sexual harassment or assault complaints or claims.
- An employee may still agree to arbitrate a dispute at the time the dispute arises, which may be worth exploring in some situations.
- The law does not have any impact on other discrimination claims or other employment disputes, so arbitration agreements may still be advisable for some companies.
- Companies should review and revise any arbitration provisions in their employment-related agreements (nondisclosure, nonsolicit, noncompetition, employment agreements and any other agreements utilized by the company). If the arbitration clause attempts to mandate arbitration for sexual harassment claims, a court could invalidate the entire clause, an outcome that is uncertain at this point.
