On Thursday, February 10, 2022, the United States Senate passed a bill amending the Federal Arbitration Act (“FAA”) to prohibit compulsory arbitration for individual, joint, class or collective action claims based on workplace sexual harassment and/or sexual assault. The House bill, which generated tremendous bipartisan support before coming to the Senate, is now before President Biden for final signature. While nothing is certain, all signs indicate that the bill will be approved.

Although narrowly focused, the pending bill represents a dramatic change in how workplace sexual harassment and/or sexual assault claims are likely to proceed. Assuming the amendment to the FAA is signed into law, the measure would cover “any dispute or claim that arises or accrues on or after” the enactment date such that an employee raising a sexual harassment and/or sexual assault claim may, but cannot be required to, submit their claims to arbitration irrespective of whether the person signed a valid agreement to arbitrate those claims. Although almost identical to the House bill, the Senate bill makes one significant change by defining “Sexual Harassment Dispute” claims as:

(A) Unwelcome sexual advances.

(B) Unwanted physical contact that is sexual in nature, including assault.

(C) Unwanted sexual attention, including unwanted sexual comments and propositions for sexual activity.

(D) Conditioning professional, educational, consumer, health care, or long-term care benefits on sexual activity.

(E) Retaliation for rejecting unwanted sexual attention.

Importantly, the bill also addresses how determinations regarding enforceability of an agreement and questions about whether the legislation applies to a particular dispute will be decided. Rather than those two issues being considered by an arbitrator, the bill’s language specifically delegates that authority to courts alone. 

Understandably, the implications of the bill are far reaching. On the employer side, arbitrations have long been utilized as a cost-effective measure in confidentially resolving disputes and keeping claims out of the public eye. For employees, the option to pursue their claims either individually, jointly, or collectively in court presents the opportunity to leverage public opinion and might very well place added pressure on employers to settle disputes early. Notably, however, the benefit in an employee bringing a claim in court may be somewhat diminished by a generally longer adjudication process and higher costs. As for the court system, the obvious consequence of the bill would likely add to court backlogs where compulsory arbitration naturally cuts down on the number of claims handled by the court system. Further, based on the bill’s language delegating authority to courts solely for questions of agreement enforceability and application, increased judicial engagement will surely follow.  

Employers should consider reviewing their arbitration agreements with the posture that the bill will likely be signed into law. To that end, and while identifying language that addresses arbitration of these claims is advisable for purposes of optics and avoiding confusion down the line, it is worth noting that the bill does not penalize an employer for failing to revise an agreement or attempting to enforce it.