What is the Impact of New Law Barring Employers from Forcing Cases into Arbitration?

What are “arbitration agreements?”

Arbitration is a process where parties to a dispute agree to resolve it outside of court. Employers often include arbitration provisions in their employment contracts that force employees to work through an “arbitration” process to bring their complaint against the company. This process is closed, is largely secretive, and prevents wrongdoing from coming to light. Until recently, forced arbitration applied to most types of claims and gave the benefit of extensive protection to employers at the expense of their employees’ rights. The New York Times estimates that 60 million American workers are currently bound by mandatory arbitration agreements.

Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.

A new bill, which was passed by the U.S. Congress last week, will prevent employers from shielding wrongdoers from accountability in the case of any “sexual harassment dispute” or “sexual assault dispute.” This bill comes in the wake of the rising “Me Too” movement, which encourages survivors of sexual assault and harassment, particularly in professional environments, to speak up about their experiences and challenge the culture that perpetuates this abuse. The bill specifically prevents employers from enforcing any “predispute arbitration agreement” or “predispute joint-action waiver” that would block an employee from bringing their action to court.

What about other claims?

While this law would apply narrowly to the sexual assault and harassment claims it describes, it would not prevent mandatory arbitration agreements for employees with other serious complaints such as wrongly withheld wages, racial discrimination, or gender-based discrimination that does not involve sexual harassment or assault. The law would not apply to existing agreements either, but rather “with respect to any dispute or claim that arises or accrues on or after the date of enactment of [the] Act.” This law also would not remove the requirement that survivors of sexual assault or harassment first register their complaint with the Equal Employment Opportunity Commission or another appropriate agency before taking sexual harassment or discrimination claims to court.