A few months ago (10/13/21 Post), we discussed the status of arbitration agreements in California. We explained how, under California’s AB 51, employers are prohibited from requiring employees to sign, as a condition of employment, agreements requiring arbitration of claims under the Fair Employment and Housing Act (such as sexual harassment) or the California Labor Code (such as claims for wages). We explained that this legislation had been challenged as potentially preempted by the Federal Arbitration Act (“FAA”).
Another limit on arbitration agreements has recently been imposed, this time at the federal level. On March 3, 2022, the President signed H.R. 4445, the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” The most significant part of H.R. 4445 is that it amends the FAA to provide that, if an employee signs an arbitration agreement before a dispute involving sexual assault or sexual harassment arises, the agreement is unenforceable as to that dispute. That means that if an employee chooses, the employee can file a sexual harassment or sexual assault claim in court, whether or not an arbitration agreement has been signed.
The amendment applies to all past and future agreements, including those that were signed before the law was enacted. However, the amendment only applies to claims or disputes of sexual harassment or sexual assault that arise or accrue on or after March 3, 2022.
The amendment does not prohibit arbitration of sexual assault or sexual harassment disputes. Rather, its scope is narrower: it prohibits an employer from compelling arbitration of such disputes if the basis for doing so is in a pre-dispute agreement or waiver. An employee can still elect to arbitrate such disputes.
The amendment applies to both individual claims and to class or collective actions, and whether it applies to a given case is to be decided by a judge, not an arbitrator.
Given AB 51’s existing ban on arbitration agreements requiring arbitration of FEHA claims, H.R. 4445 may have limited significance for employers in California. It serves, however, as a reminder that employers should not require newly hired employees to sign arbitration agreements as a condition of employment. They may continue to offer them as a voluntary agreement, provided the right language requirements are met. If you are using offer letters or employment agreements that include a clause requiring the signing of an arbitration agreement, please call us to revisit that issue.
DISCLAIMER
The information provided on this website includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. This website is not presented as a substitute for obtaining legal advice from a licensed attorney, nor should you rely on anything on this website for legal purposes without seeking legal advice from a licensed attorney.
Sending an e-mail message to WorkWise Law, PC (the “Firm”) or otherwise interacting with the Firm through this website does not legally obligate the Firm to represent you as your attorney. The Firm will not undertake legal representation for anyone without a written and signed retainer agreement.