Recently enacted legislation finally puts an end to forced arbitration over sexual harassment or assault, meaning these cases can — and will — make their way to the courts. It’s something that should be on the radar of
The original Federal Arbitration Act silenced victims, protected perpetrators and fed toxic cultures by blocking a victim’s ability to have their voice heard in court. Instead of bringing bad behavior into the light, companies all but erased it by controlling closed-door arbitrations and demanding confidentiality agreements. When sexual harassment was pervasive inside a company, victims had no means to openly name or confront the accused, nor the ability to point to past aggressions that could inform fair decisions. In a nutshell, forced arbitration pushed us all backwards by eroding trust and damaging
Thankfully, that’s changing.
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Most of us are aware that the #MeToo movement was the spark that lit the fire, serving as the collective moment victims needed to break this conversation wide open. As such, whistles blew loudly, and organizations woke up to how deeply flawed and unfair this legislation truly was. While some companies including
Enter the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021. The new law is effective immediately and applies to arbitration and class- and collective-action waiver agreements entered into by employees before its effective date. The new law walks back the most punitive parts of the old legislation.
First, even if a victim previously agreed (usually under pressure) to arbitrate and has a claim, that signed agreement no longer holds up. Second, if victims want to proceed via a class or collective action, they now can, even if they previously waived the right to do so. Finally, for victims who may prefer to arbitrate, they still have that option.
All of this is a strong step toward empowering victims, but there’s an elephant in the room: the requirements for employer agreements didn’t change. Employers don’t have to amend or replace existing arbitration and class- or collective-action waiver agreements. Nor are they required to remove sexual assault or sexual harassment claims from their arbitration and class- or collective-action waiver agreements going forward. This keeps the burden to act on the victim.
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Read that again. Now consider what it says about your client’s culture if they don’t take the initiative to replace their agreements. Even though the law changed for victims, employers still have a choice in how they apply and communicate the new law to their workforce. This is where employee-relations professionals need to take a stand. Let this be a wake-up call to corporate leadership.
Use this time to encourage your employer clients to gather around a conference table, re-examine policies and get honest about their culture. Let this be the impetus to take action. Suggest that they ensure that fair and consistent investigation practices are in place, as well as an ability to understand trends and history, and the insights to stay vigilant. Let this be a moment to warn would-be perpetrators that they will be put on public notice and stopped before they cause harm.
All key stakeholders need to be reminded that from now on, the threat of class-action suits is real. Whether your client’s policies reflect the new change or not, lawyers will be asking for proper documentation and proof of fair and thorough investigations. Ask them if they’d rather be scrambling at every discovery request or continuously prepared with the right data.
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Right now, the reversal of forced arbitration only applies to sexual misconduct, but our world is changing fast. It begs the question, what’s next?
If your client’s organization espouses the values of trust and transparency, now is the time to make sure their policies actually are in alignment. This new law provides an excellent opportunity for leaders to live up to their employment promises. It gives them a second chance to fix what has long been broken and nurture a culture that truly feels safe and supportive.
