Mandatory Arbitration Prohibited for Sexual Harassment Claims

On February 7, 2022, the House passed H.R. 4445, three days later the Senate also passed the measure, and President Biden has just signed the bill into law.

H.R. 4445, titled Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, will dramatically change the way in which businesses address and resolve claims of workplace sexual harassment and assault. Specifically, employment agreements may not require employees who experience sexual assault or sexual harassment to pursue their claims in arbitration. Employees have a choice: they may file claims in court or pursue arbitration. The law does not apply to claims unrelated to sexual assault or harassment.

The law will not have a significant impact on employment agreements entered into in some states, like New York, where a ban on mandatory arbitration of sexual harassment claims already exists.

It is important to note that this prohibition will apply retroactively to existing employment contracts. As a result, employers who already have mandatory arbitration provisions must take care to change company policies and review employee handbooks and collective bargaining agreements, because existing arbitration mandates will no longer be enforceable with respect to sexual harassment and assault allegations. This includes cases brought under federal, tribal, or state laws.

Suggested Steps That Employers Should Take:

1. Review your employment agreements, employee handbooks, collective bargaining agreements, and other employee communications to determine whether they are still enforceable.
2. If necessary, update policies and enter into new agreements with employees.
3. Consider whether mandatory arbitration clauses are still necessary for other types of claims.
4. Be aware that should any workplace sexual harassment or sexual assault scenarios arise, individuals now have the option to litigate in court, rather than behind closed doors in mandatory arbitration. This applies to agreements that are already in place.
5. Review procedures for reporting claims of sexual assault and sexual harassment. Employers may want to take a more proactive approach in addressing claims of sexual assault or sexual harassment in order to avoid litigation that could damage the company’s reputation. This should include any procedures to address retaliation against employees who file complaints and employees who witness sexual assault or sexual harassment.
6. Be sure to carefully document any steps taken to address complaints of sexual assault or sexual harassment.
7. Train the workforce and management on harassment prevention, how to respond to workplace complaints and concerns, and the importance of preventing claims of retaliation.
8. Consider an initiative designed to shift employees’ perception so that they feel safe discussing their concerns with management.
9. Consider treating all of the abovementioned action steps as best practices and applying them to other claims of discrimination, harassment, and workplace bullying.

As always, the Wagner Law Group’s HR and Employment Law team is here to assist you. We design and deliver effective workplace trainings and initiatives. We also help create policies and advise on all matters relating to the employer-employee relationship. Please do not hesitate to reach out to Katherine Brustowicz, David Gabor, or Ginny Peabody.