Just a few weeks ago, on March 3, 2022, President Joe Biden signed into law a bill that amends the Federal Arbitration Act (FAA) by ending forced arbitration in workplace sexual harassment and assault cases. During the White House ceremony, President Biden discussed how companies, not survivors, benefit from the secrecy of arbitration. Signing this bill, as President Biden said, sends “a clear and strong message” that survivors will no longer be denied their voice, and that all survivors deserve a fair chance to speak their truth to combat sexual harassment in the workplace.[1]
The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFASASHA, or the “Act”) is a product of bipartisan congressional support, which is rarely seen these days on Capitol Hill. Section 402 of the text, entitled No validity or enforceability, states that “no pre-dispute arbitration agreement or pre-dispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.”[2] This means that survivors of sexual harassment or assault will no longer be prevented from filing lawsuits in court, even if they signed a contract including a pre-dispute arbitration clause before the passing of the Act.
Many states have previously passed legislation very similar to the Act, but states were previously subject to preemption under the FAA. This Act, however, is not subject to preemption, as it amends the FAA itself.
The Act defines several elements essential to the legislation: pre-dispute arbitration agreements, pre-dispute joint-action waivers, sexual harassment disputes, and sexual assault disputes. Predispute arbitration agreements encompass all agreements to arbitrate disputes that had not yet occurred at the time the agreement was made. Predispute joint-action (or class action) waivers are all agreements waiving the right of or prohibiting a party to the agreement to participate in any collective action in an administrative, arbitral, or judicial forum, that concern any dispute that has not occurred at the time the agreement was made. Sexual harassment disputes relate to any alleged conduct that constitutes sexual harassment under applicable State, Tribal, or Federal law. The United States Equal Employment Opportunity Commission (“EEOC”) defines sexual harassment as any “unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature.”[3] Finally, sexual assault disputes encompass the definitions in Section 2246 of title 18, which include “sexual act” and sexual contact.” [4] Sexual contact is defined as the contact or penetration, however slight, by anything, with an intent to abuse, humiliate, harass, degrade, or arouse or gratify the sexual desire of any person.[5]
Although these definitions were provided in the legislation, several important questions regarding the scope of the Act remain. Several Senators have acknowledged that future bi-partisan agreements may be required to clarify the scope of the Act, if necessary.[6]
So many of us in the dispute resolution field are now asking the key question: how will this new law work in practice? Mandatory arbitration agreements and forced joint-action waivers will now be invalidated if they are agreed to prior to the occurrence of a dispute. However, so long as the parties agree to arbitrate the dispute after the incident occurs, a claimant may still initiate an arbitration proceeding. But either party may also bring the claim through judicial means if they so choose. So, in essence, an employer can no longer compel an employee to pursue a sexual harassment or assault claim through arbitration; the employee must elect to do so. Still, the Act specifies that arbitrability will be determined by the courts, not an arbitrator. The legislation aims to publicly resolve disputes about whether the Act applies to a claim, rather than shielding the decision within the privacy and secrecy of arbitration.[7]
But if fewer disputes involving sexual harassment and sexual assault are going to be resolved in arbitration, where will they be resolved? The advocates behind the legislation may have envisioned that these kinds of cases would now move wholesale into the courts, but it is reasonable to presume that there may also be a rise in the use of mediation in sexual harassment cases because of the new law. Mediation has been shown to be effective in sexual harassment cases in the past [14], and as Maris Swift, Diana Pace, and Mary Bedikian explained it in 2005,
“…employers have found that mediation is a good way to educate the perpetrator about unacceptable behavior in the workplace. It also allows victims an avenue in which to vent feelings that have arisen as a result of disparaging treatment. Sexual harassment claims are often difficult to resolve because the employer is faced with a ‘he said/she said’ situation and no other form of proof. With mediation, the emphasis is not on who has a better case. Consequently, parties may focus on resolving their differences and developing a set of work rules with the mediator that allow them to continue to work together and move beyond the dispute.” [8]
Perhaps this is an opportunity for the mediation field to create new resolution options specifically tailored to the needs of survivors of sexual harassment and assault, options focused on understanding, healing, and reconciliation instead of adjudicative fact-finding and legal argumentation. Some sexual harassment cases certainly are best resolved in a judicial resolution process, but for other cases a more restorative approach might better meet the needs of the disputants and achieve a more effective resolution.
While the signing of this Act into law is monumental – the largest change to arbitration law in decades – it is merely one step in the direction of a continuing push towards ending forced arbitration in other contexts (e.g., all consumer and employment matters), not just sexual harassment and assault cases. For now, employers can still enforce predispute forced arbitration clauses for claims other than sexual harassment and abuse, but if this momentum for reform continues, we may have more changes coming in the near future.
[2] https://www.congress.gov/bill/117th-congress/house-bill/4445/text
[3] https://www.eeoc.gov/sexual-harassment
[4] 18 U.S.C. Code § 2246 – Definitions for chapter
[5] https://www.law.cornell.edu/uscode/text/18/2246
[6] https://www.jdsupra.com/legalnews/the-ending-forced-arbitration-of-sexual-2269027/
[7] https://www.jdsupra.com/legalnews/the-ending-forced-arbitration-of-sexual-2269027/
[8] https://www.mediate.com/articles/hicksT8.cfm
[9] https://scholarworks.gvsu.edu/cgi/viewcontent.cgi?article=1037&context=sbr
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