The Federal Arbitration Act (FAA), was enacted all the way back in 1926. It applies to both state and federal courts and enables people to resolve a dispute through arbitration with the court’s assistance. Understanding how the FAA applies to contracts and sexual harassment claims is essential. Let us explain.
The FAA allowed employers to require arbitration upon employees who brought sexual assault or harassment claims. They did so by requiring their employees to sign pre-dispute agreements as a condition of their employment. By signing, the employee agreed to take any future claims to arbitration, which is a private proceeding, where litigation is public.
However, that is no longer the case. On March 3, 2022, President Biden signed into law the Ending Forced Arbitration of Sexual Assault and Harassment Act of 2021. This amends the FAA and allows employees to bring workplace sex harassment claims to court. These individuals can now do so even if they agreed to arbitrate sexual harassment claims before they happened—as long as they signed a pre-dispute agreement after March 3rd.
Understanding the Act
The most significant component of the Act is that employers cannot mandate arbitration if their employees have sexual assault or harassment claims. It is important to note that each state defines sexual assault and harassment differently. Furthermore, employers cannot ask their employees to sign a waiver agreement if it limits the employee’s ability to file a sexual assault or harassment complaint as part of a class-action lawsuit.
The Act also extends to individuals who don’t directly work for the employer. For example, think of a business owner who receives materials and supplies from a third-party vendor. The employer can no longer ask the vendor to sign a pre-dispute agreement or waiver that forces the vendor into arbitration regarding a sexual assault or harassment claim. This individual has the right to take their claim to court or be part of a class action.
Timing
The Act only applies to pre-dispute agreements and waivers signed before any instance of sexual assault or harassment has ever occurred. If you sign an agreement after the instance of sexual assault or harassment, the Act will not apply to you. You will have to honor the agreement you signed. This is a prime example of why speaking to an employment law attorney is important. Allow them to explain what you are signing—and what you may be giving up by doing so.
Applying this Act to your unique situation may not be as straightforward as it appears. Your employer can still require you to sign a pre-dispute agreement as long as it omits sexual harassment and assault claims. And what happens if you have multiple claims? For instance, how do you proceed if you accuse your employer of both sexual harassment and retaliation?
These are the types of questions that you can ask Spitz Legal Counsel, LLC. We have been offering business and employment law solutions tailored to your unique circumstances for more than fifteen years. Contact us to schedule a free consultation. We can speak more about this Act or other employment law matters.