Key Takeaways for Employers as New Law Ends Forced Arbitration of Sexual Assault and Harassment Claims

President Joe Biden has signed into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, which  allows an individual asserting sexual assault or sexual harassment claims to bring such claims to court, even if they had previously agreed to mandatory arbitration. Dinsmore employment attorney Aly St. Pierre wrote about what employers need to know about this new law for The Indiana Lawyer. An excerpt is below.

As the act applies directly to sexual harassment claims, it will likely have a sizable impact on the arbitration agreements entered into by employers and employees. In addition to its main provisions, employers should know the following about the act:

1. The act is effective immediately and applies to any claim that arises on or after March 3. This means the act applies to all existing predispute arbitration agreements, even those signed before its enactment. When determining if the act impacts the arbitrability of a certain claim, the operative question is when the claim of sexual assault or harassment arose, not when the predispute agreement was executed.

2. The act provides that a court, not an arbitrator, will decide questions about the applicability of the act to a certain claim or the validity and enforceability of an agreement to arbitrate. This limitation applies regardless of any language in the agreement to the contrary. Having to go to court over questions of applicability or enforceability may significantly increase the time and costs involved in defending a claim of sexual harassment.

3. The act does not make predispute arbitration agreements per se unenforceable. Rather, it gives the employee the power to decide whether his or her claim of sexual harassment will be heard by an arbitrator or a court. Agreements to arbitrate sexual assault or harassment claims may still be enforced if the individual alleging sexual assault or harassment consents to arbitration after the claim is asserted.

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