On March 3, President Biden signed a new law that bans the use of pre-dispute arbitration agreements in cases alleging sexual assault or sexual harassment.
The reform had been sought since the early days of the #MeToo movement when it was discovered that in several high-profile cases employers had used arbitration agreements to keep harassment allegations from becoming public.
Over the years, a number of states passed similar legislation in response to requests made by victims’ advocates, including laws that were enacted in California, New York and New Jersey.
However, courts have found these statutes to be pre-empted by the Federal Arbitration Act, which now has been revised by the law Biden signed.
The new federal law, passed by both houses of Congress with wide bipartisan support, does not apply retroactively in arbitrations that are already pending or to sexual assaults or harassment that “accrued” before the legislation was enacted.
The legislation applies to all claims of sexual assault or harassment, whether they arise under federal, state or tribal law. However, it does not prohibit a plaintiff from agreeing to arbitration after the claim has arisen.
“Some employees may choose to continue to bring these claims through arbitration, given the privacy afforded by the arbitration process,” note attorneys for the law firm of Baker McKenzie.