Last week, the United States Senate passed H.R. 4445, titled “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” The bill, which President Biden is expected to sign into law, will make pre-dispute arbitration agreements between employers and their employees unenforceable when it comes to sexual harassment or sexual assault disputes. In lay terms, this means that employers in the United States will no longer be able to compel employees to arbitrate sexual harassment (or sexual assault) disputes even though those employees may have signed an arbitration agreement on their date of hire. Instead, those disputes will be heard in federal, state, or tribal court.
H.R. 4445 also applies to sexual harassment or sexual assault cases that might be brought against an employer on a class action basis. The bill, however, will not have a retroactive effect but will apply only to sexual harassment or sexual assault claims that arise after the bill’s enactment.
The bill has received bipartisan support, with supporters such as Sen. Richard Durbin (D-IL) saying that “arbitration clauses not only deny survivors their right to a day in court, they also conceal their allegations from public view.”
California readers may be wondering how H.R. 4445 interacts with California’s pre-existing AB 51, which generally bans pre-dispute arbitration agreements in the employment context (AB 51 is not limited to sexual harassment or sexual assault claims). The answer: It depends on AB 51’s ultimate fate. As we’ve mentioned before, California’s employment-arbitration ban is deeply controversial, and we have reason to think that the United States Supreme Court will ultimately overturn that law. If that is the case, H.R. 4445 will govern arbitration agreements in the employment context and ban compulsory arbitration of sexual harassment or sexual assault disputes. If California’s AB 51 law, however, is ultimately affirmed, H.R. 4445 may, at best, have a negligible effect on pre-dispute employment arbitration agreements in California as California’s law is broader in scope than H.R. 4445.
If you need assistance to further understand how this impacts your business, please contact us at info@mnklawyers.com.
This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.
