We often encounter template employment agreements that have not been revised for years or even decades in practicing employment law. This can have a detrimental impact on the enforceability of employment agreements, particularly as it relates to non-compete, non-solicitation, and non-disclosure provisions because state laws (either judge-made law or statutes) are constantly changing. In recent years, certain state laws have evolved to prohibit mandatory arbitration agreements relating to employment disputes.
Now, all employers, regardless of location, need to reexamine their employment agreements to determine the potential impact of a pending federal law. Earlier this month, Congress passed H.R. 4445, "Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the "Act"), which, once signed by the President, will immediately bar mandatory arbitration of disputes involving sexual assault or sexual harassment arising under state or federal law. While the Act applies to any and all agreements, this law most significantly impacts employment-related agreements.
Specifically, the Act prohibits:
Any agreement to arbitrate a sexual assault or sexual harassment dispute when such dispute has not yet arisen; and
Any agreement that would prohibit or waive one of the parties' rights to participate in a joint, class, or...
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