On March 3, 2022, President Biden signed H.R. 4445, known as the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” H.R. 4445 amends the Federal Arbitration Act to bar pre-dispute arbitration agreements of claims alleging sexual assault or sexual harassment, and includes a bar against any waivers of the right to bring such claims jointly and/or on a class basis.
H.R. 4445 will apply to any dispute or claim that arises or accrues on or after March 3, 2022, the date H.R. 4445 became law. Under H.R. 4445, an employee may agree to mandatory arbitration after an incident occurs. For example, an employee who claims sexual harassment on or after March 3, 2022 and signed an arbitration agreement at the time of hire, has the option of suing in court or proceeding in arbitration.
H.R. 4445 applies to arbitration agreements signed before disputes arise relating specifically to 1) sexual assault and 2) sexual harassment as defined by state, federal, or Tribal law. This means that H.R. 4445 applies to claims under California’s Fair Employment and Housing Act and Title VII.
Employers in all states, including California and Nevada should seek the advice of qualified employment counsel about using arbitration agreements with employees in light of this new law.
Pending Cases Relating to Arbitration Agreements in California
In California, H.R. 4445 adds another issue to consider in using arbitration agreements. For example, California law adopted AB 51 that prohibits mandatory arbitration agreements, the validity of which is being considered by the Ninth Circuit in Chamber of Commerce of the United States v. Bonta as discussed in our podcast and blog:
- Podcast: What You Need to Know About AB 51 Mandatory Arbitration Agreements
- Ninth Circuit Removes Preliminary Injunction, Mostly Upholds California Law Prohibiting Mandatory Employment Arbitration Agreements
California employers using arbitration agreements, including voluntary arbitration agreements in light of AB 51, should also revisit language relating to California’s Private Attorneys General Act (PAGA) waivers. The U.S. Supreme Court has granted certiorari in Viking River Cruises, Inc. v. Moriana to decide the issue: “Whether the Federal Arbitration Act requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under the California Private Attorneys General Act.” Per the rule established by Iskanian (as discussed in our blog here), California employers cannot force employees to arbitrate PAGA claims based on the premise that PAGA claims are also pursued on behalf of the State of California, and the California is not party to the arbitration agreement. If the employer in Viking River Cruises, Inc. v. Moriana is ultimately successful, employers may be able to include a representative action waiver, which effectively prohibits employees from bringing class, collective, or representative actions including those under PAGA. Oral argument is set for March 30, 2022 and it may be a few more months before a written decision issues.
Takeaways for Employers
- Contact employment counsel to review your current arbitration agreement or about using an arbitration agreement with employees in the future.
- Review and update any arbitration policies and handbooks.
We will be discussing this and other leave issues in our upcoming California Mid-Year Employment Law Update on June 8, 2022 and the Nevada Mid-Year Employment Law Update on June 9, 2022. For more information and to sign up for this and other events, visit our Events Page.