In a rare display of bipartisanship, the House and Senate have passed the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (H.R. 4445). The bill still needs to be signed by President Biden, but he has already expressed support for the bill, and he could sign the bill into law before the end of the week.

Ban on Forced Individual Arbitration for Sexual Harassment Claims 

Recently, some employers have required non-union employees to enter into mandatory “arbitration agreements,” which require the employee to bring any claims against the employer (including claims for discrimination, harassment, retaliation, overtime, etc.) in arbitration instead of in court.vThese agreements also typically prohibit the employee from bringing claims on behalf of other employees (i.e., “class” claims) and instead require individual arbitration.

When it is signed into law, H.R. 4445 will amend the Federal Arbitration Act (or FAA) to invalidate pre-dispute arbitration agreements and pre-dispute joint-action waivers involving claims of sexual harassment and sexual assault. Specifically, Section 402(a) of the law would provide that:

Notwithstanding any other provision of this title, at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct, no predispute arbitration agreement or pre-dispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.

The law would also require that determinations about the applicability of the law to arbitration agreements would be decided by the courts – not an arbitrator. As written, the law would apply to “any dispute or claim that arises or accrues on or after the date of enactment of this Act.”

Effectively, arbitration agreements requiring an individual to arbitrate a future claim of sexual assault or sexual harassment will be unenforceable if they accrue after H.R. 4445 is signed into law. Likewise, agreements requiring an individual to proactively waive their right to participate in a joint, class, or collective action of a future sexual assault or sexual harassment claim are also unenforceable. Under H.R. 4445, the aggrieved party would have the ability to choose whether to arbitrate their claims or file a lawsuit in court.

H.R. 4445 Does Not Directly Impact Contractors’ Collective Bargaining Agreements

To be clear, H.R. 4445 has no direct impact on the enforceability of grievance and arbitration procedures set forth in a contractor’s collective bargaining agreement (or CBA) with the Union. However, in 14 Penn Plaza LLC v. Pyett, 556 U.S. 247 (2009), the Supreme Court held that parties to a CBA could require bargaining unit members to resolve their statutory claims, including claims of sexual harassment, under the CBA’s grievance-arbitration process.

Thus, if the contractor’s CBA requires bargaining unit members to submit statutory claims, including claims of sexual harassment, to the dispute resolution procedure set forth in the CBA, then H.R. 4445 would likely prevent the contractor from forcing a union employee to bring any claim of sexual harassment in arbitration.

Bottom Line

Once H.R. 4445 is signed into law, contractors should be aware that existing arbitration agreements with non-union staff may be unenforceable. While contractors are not barred from entering into forced arbitration agreements with non-union staff, H.R. 4445 provides that employees cannot be compelled to pursue their claims of sexual harassment in arbitration.

For union employees, H.R. 4445 will not have any direct impact on the contractor’s administration of the CBA unless the CBA provides for mandatory arbitration of statutory claims (including claims for sexual harassment). In that circumstance, HR 4445 would prevent the contractor from forcing a union employee to arbitrate their sexual harassment claim.  It would not, however, prevent the union employee from voluntarily agreeing to pursue their harassment claim in arbitration.