Employers can’t mandate arbitration of sexual assault and harassment claims

Courts have long favored arbitration as a method of dispute resolution under the Federal Arbitration Act (FAA). In 2018, the U.S. Supreme Court reinforced the policy favoring arbitration agreements in Epic Systems Corp. v. Lewis. The Court ruled that the FAA requires enforcement of arbitration agreements that fall within its scope, including agreements in which employees prospectively waive their rights to file a suit against their employers.

Shortly thereafter, arbitration agreements came under significant attack (largely due to the #MeToo movement). Congress responded to such attacks by passing the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the Act).

What does the Act prohibit?

The Act, which took effect earlier this year, amends the FAA and says that pre-dispute agreements by employees to submit a claim of sexual harassment or sexual assault to arbitration will be invalid and unenforceable. Simply put, while an employer and employee may agree to pre-dispute arbitration in an offer letter, employment agreement, or arbitration agreement, that clause will not apply to any sexual harassment disputes that may arise later.

The Act doesn’t prohibit post-dispute arbitration agreements, however. In other words, if an employee asserts a sexual harassment claim against an employer and signs an arbitration agreement after asserting the claim, that dispute may be submitted to arbitration.