What the new sexual harassment arbitration law means for you

Having the option of arbitration for employer/employee disputes is crucial for avoiding costly litigation. But going forward, there’s a new amendment to the Federal Arbitration Act on the books that you need to know about.

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act went into effect March 3, 2022, and it means employers can no longer mandate arbitration of an employee sexual harassment or assault complaint. This also applies to any sexual harassment/assault joint action waiver agreements.

The EEOC announced its approval of the legislation.

Sexual harassment arbitration still on the table

While the law puts the choice solely in the hands of workers how to pursue a sexual harassment claim, it also means an employee can still voluntarily choose arbitration. In some cases, they may prefer to keep details of alleged workplace-related sexual harassment or assault private, instead of them becoming public record in the courts.

However, any employment agreement that requires employees with claims of workplace sexual misconduct to go to arbitration is now invalid. So if your organization has arbitration provisions in employment letters, employment contracts, collective bargaining agreements or employee handbooks, let HR know these must be reviewed and may need to be revised to be compliant with the new law.

In the HRMorning.com webinar “6 Overlooked Posting Requirements That Could Put Your Company at Risk,” Dr. Jim Castagnera, the president of Dr. Jim’s One-Stop HR Shop, said: “That doesn’t mean you stop putting arbitration clauses in your (employment) contracts. I think they’re a great thing … You might consider a mediation clause” specific to sexual harassment or assault claims that provides notification of a mediation option.

“Mediation … has a track record of settling a suit 75% of the time,” Castagnera added.

Because workers can also continue to file charges with the EEOC, it’s important to have a zero-tolerance policy on sexual harassment. Be sure employees are regularly reminded of what behavior is appropriate in the workplace.

In addition, Castagnera said that the Biden administration could be considering a similar law covering mandatory workplace discrimination arbitration. We’ll keep you posed.