Seyfarth Synopsis: Recently, Congress passed significant new legislation amending the Federal Arbitration Act and precluding employers from mandating that employees arbitrate sexual harassment or sexual assault claims. Importantly for employers, however, this new law does not impact employers’ ability to require arbitration of wage-hour claims, which, for most employers, is benefit of employment arbitration programs.
Mandatory arbitration agreements with class and collective action waivers play an important role in managing workplace disputes. As a condition of employment, the employee and the employer agree that any claims will be resolved in arbitration, which is the less formal and usually more expeditious than court. The Supreme Court has consistently supported the use of arbitration agreements in employment, and explicitly upheld employment-related class and collective waivers in its 2018 decision in Epic Systems Corp. v. Lewis.
Last week, Congress passed H.R. 4445, known as the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” The legislation, which is now awaiting President Biden’s signature, permits any person alleging sexual harassment or sexual abuse, at his or her election, to invalidate an arbitration agreement or class/collective action waiver that otherwise would require the harassment/abuse claim to be arbitrated.
The law is the culmination of years of scrutiny and criticism of arbitration, especially in light of the “Me Too”...
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