A new law making predispute arbitration agreements and class action waivers covering sexual assault and sexual harassment claims invalid and unenforceable has passed in Congress and is headed to President Joe Biden’s desk.
The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 amends the Federal Arbitration Act (FAA) to give employees who are parties to arbitration agreements with their employers the option of bringing their claims of sexual assault or sexual harassment in arbitration or court. President Biden reportedly is expected to sign it shortly.
The FAA provides that written agreements to arbitrate are “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. ” As recently as 2018, the U.S. Supreme Court reaffirmed, in Epic Systems v. Lewis, that the FAA requires enforcement of arbitration agreements, including those with class action waivers, in accordance with their terms.
In response to the Court decision and the #MeToo movement, several states enacted or proposed legislation curbing use of arbitration agreements for sexual harassment or other employment claims. Such laws conflicted with the FAA as to agreements governed by it and are being challenged in litigation.
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