With bipartisan support, Congress passed the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (the “Act”), which amends the Federal Arbitration Act and prohibits mandatory arbitration of individual and joint, class and collective sexual harassment and sexual assault claims. The Biden Administration has expressed support for the legislation, and President Biden is expected to sign the Act.

The Act prohibits arbitration of sexual harassment and sexual assault claims and invalidates pre-dispute arbitration agreements with respect to cases filed under federal, state or tribal law, unless the claimant, or named representative of the joint, class or collective action, voluntarily elects arbitration to resolve such disputes. The new law also voids any waiver of class and collective actions related to sexual harassment and sexual assault disputes.

“Sexual harassment” as defined by the Act means (a) unwelcome sexual advances; (b) unwanted physical contact that is sexual in nature, including assault; (c) unwanted sexual attention, including unwanted sexual comments and propositions for sexual activity; (d) conditioning professional, educational, consumer, health care, or long-term care benefits on sexual activity; and (e) retaliation for rejecting unwanted sexual attention.

“Sexual assault” is defined as “a nonconsensual sexual act or sexual contact,” as such terms are defined in Section 2246 of Title 18 (addressing federal sex offense laws) or similar applicable tribal or state law, including when the victim lacks capacity to consent.

While the law does not impede an ongoing arbitration of a sexual harassment or sexual assault claim, it voids any existing arbitration agreements that mandate arbitration of sexual harassment and sexual assault claims and will apply to any sexual harassment and sexual assault disputes arising or accruing after the law is enacted. Any issue as to whether the new law applies to a particular dispute will be determined by federal law, and the enforceability and validity of an arbitration agreement will be determined by a court rather than an arbitrator, even if the arbitration agreement designates such determination to the arbitrator.

Seward & Kissel will continue to monitor developments and additional guidance on the new law. If you have any questions regarding the law, or any other employment issues, please contact Anne C. Patin at (212) 574-1516, Julia C. Spivack at (212) 574-1373 or your relationship partner at the Firm.