In the wake of the #MeToo movement, several states, such as California, have taken steps to ban mandatory arbitration clauses that cover claims of sexual harassment and assault. However, such prohibitions have decidedly not been the norm across the U.S.
That all changed on Thursday, February 10, 2022, when the United States Senate voted to approve a bill that will invalidate and render unenforceable mandatory arbitration clauses nationally in cases “relating to sexual harassment disputes or sexual assault disputes.” The House of Representatives recently (on February 7, 2022) passed an identical version of the bill with significant bipartisan support. The bill is now only an expected signature—from President Biden—away from becoming law. Assuming its enactment, the bill will apply to “any dispute or claim that arises or accrues on or after the date of enactment,” meaning it will not retroactively apply to ongoing arbitrations, but will take immediate effect going forward.
Importantly, because victims of sexual assault or sexual harassment may not always view the confidentiality of arbitration as a bad thing, the bill gives the person alleging such conduct the option whether they want to invoke the arbitration clause or invoke the bill and proceed in court. This gives complainants—but not employers—more control over the forum in which their dispute is heard, and whether they want to keep their allegations private. The bill also clarifies that mandatory arbitration provisions are invalid and unenforceable not only for individual claims or allegations, but rather to any case related to a sexual assault or sexual harassment dispute. This means that employers with mandatory arbitration provisions may start to see claims of sexual harassment or sexual assault inserted into cases primarily concerning other protected categories or activities; in an attempt to invoke the protections of the bill and nullify a mandatory arbitration provision as to the entire case.
The bill further makes clear that disputes over whether the soon-to-be-enacted law applies (often referred to as the issue of arbitrability) must be decided by a court, not an arbitrator, even where the arbitration agreement attempts to delegate such authority to an arbitrator. Any disputes over arbitrability will also be governed by federal law.
While the bill text does not go so far as to invalidate a mandatory arbitration clause in any context just because it is written broadly enough to encompass a sexual assault dispute or sexual harassment dispute, employers should still review their mandatory arbitration clauses and consider revising them to carve out claims of sexual assault and sexual harassment, which soon would no longer be enforceable anyway, to minimize enforcement issues.