President Biden signs new law allowing employees to opt out of mandatory pre-dispute arbitration agreements in cases of sexual harassment and sexual assault

President Biden signed H.R.4445 (the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act”), which allows employees to opt out — on their own behalf or as a class representative — of mandatory pre-dispute arbitration agreements in any “sexual harassment dispute or sexual assault dispute.” Both types of dispute are defined broadly to encompass any such kind of violation of federal, tribal or state law. The Act does not allow individuals opt-out rights for other types of claims such as racial discrimination.

How this Act will apply when a person asserts both a sexual harassment claim and some other kind of claim, say, a race discrimination claim is not clear. The Act says in one place that a “case” involving a “sexual harassment dispute or sexual assault dispute” can be litigated (is not arbitrable), suggesting that the entire “case” might enjoy opt-out rights, but that very same sentence then says that is so only if the other claims “relate to” the sexual harassment/assault claims. The courts will need to decide in future litigation what all of that means and how it will apply to particular cases.

The Act does not appear to explicitly require employers to take action, such as revising their existing arbitration agreements or giving notice of this new right to employees.

The Act is effective only as to disputes and claims that arise and accrue on or after March 3, 2022.