Some employers attempt, through employment contracts, to require that employee legal challenges be pursued under private arbitration procedures, rather than through lawsuits or discrimination charges. The advantages to doing so include a less costly and more private forum for the dispute. But recent action in the U. S. Senate will prohibit employers from channeling certain cases to arbitration, specifically those alleging sex harassment or abuse.
#MeToo bill heads to Biden for signature
On Feb. 10, 2022, the Senate unanimously passed a #MeToo bill, H.R. 4445. The bill prohibits enforcement of mandatory third-party arbitration clauses in employment contracts for workplace sexual harassment or assault claims. This bill will allow anyone alleging workplace sexual harassment or assault an opportunity to pursue a civil suit against their employer in court. The bill, which had bipartisan support in both houses, nullifies pre-dispute arbitration agreements while still allowing employees to opt for arbitration. Roughly 60 million American employees are subject to mandatory arbitration clauses in their employment contracts. The bill passed 335-97 in the House and now will be sent to President Biden, who is expected to sign the bill into law. Once law, it will take effect immediately and will cover any dispute or claim that arises or accrues on or after the enactment date.
This bill impacts a multitude of employers and employees. It also applies to consumers who approve arbitration clauses in the terms of agreement they sign in exchange for using products or services, such as ride sharing services.
Employers who have binding arbitration agreements with employees should anticipate having to review and revise them once H.R. 4445 becomes law.