Employers can no longer mandate pre-dispute arbitration for claims of sexual assault or sexual harassment by employers. On Feb. 10, 2022, Congress passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “law”) ending any dispute as to whether the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (FAA), preempted state laws seeking to prohibit mandatory pre-dispute arbitration of employee sexual harassment claims. The law amends the FAA and makes pre-dispute arbitration agreements between employers and employees that would otherwise obligate the parties to arbitrate claims of sexual assault or sexual harassment invalid and unenforceable. President Biden is expected to sign the Act into law.

The law permits an employee and employer to agree to arbitrate sexual harassment and sexual assault disputes provided such agreement arises after the dispute occurs and the employee so agrees in writing. An employee may voluntarily choose to arbitrate their claim to ensure otherwise embarrassing or sensitive information remains private. The employee’s decision whether to do so will control.

The law also prohibits agreements that waive an employee’s right to participate in a joint, class, or collective action in court, arbitration, or any other forum that relates to a sexual assault dispute or a sexual harassment dispute (both defined terms).

The new law applies retroactively, invalidating any existing arbitration agreement which forces parties to...

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