Understanding New Federal Law on Arbitration in Sexual Harassment Cases

Employers in Texas need to know about a new federal law that bans mandatory arbitration in sexual harassment cases. The new law applies to various types of sexual harassment claims, including those that occur in the context of employment. President Biden signed the law on March 3, 2022, and the law took effect immediately. It is entitled “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” It is an amendment to the Federal Arbitration Act (FAA).

How will this law apply to your workplace, and what do you need to know about your responsibilities as an employer to be in compliance with federal law? If you have questions that are not covered in this overview of the act, our Frisco employment lawyers can provide additional information.

Details of the New Federal Law on Sexual Assault and Harassment Arbitration

What do you need to know about the new federal law? The summary of the law helps to clarify up front that employers may need to change policies concerning arbitration and sexual assault or harassment claims in the workplace:

“This bill invalidates arbitration agreements that preclude a party from filing a lawsuit in court involving sexual assault or sexual harassment, at the election of the party alleging such conduct.”

The specific text of the bill makes clear that an employee will not be bound by an arbitration agreement or arbitration clause in allegations involving sexual assault or sexual harassment in the workplace, and that the decision about whether to arbitrate or to take a case before a judge will be at the discretion of the employee making the allegation. The specific language of the law says:

“[A]t the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct, 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.”

How the New Law Will Likely Apply to Your Workplace and Obligations as an Employer

What do you need to do in response to the new law? You may not need to make any changes to existing documents or employee materials in order to be in immediate compliance, but you need to recognize that the following are now true under federal law:

  • You will not be able to enforce an arbitration agreement your employee signed concerning a dispute or claim relating to sexual harassment or sexual assault in the workplace.
  • Existing arbitration agreements your employees may have signed will not be automatically invalidated, but rather, your employees who have signed these arbitration agreements will have an option of having a sexual assault or sexual harassment claim heard in a court instead of by an arbitrator.
  • The new law applies to any claims that arise on or after March 3, 2022.

You should work with an employment lawyer in Texas to update any employment agreements concerning arbitration and sexual harassment so that your policies align with present federal law.

Contact Our Frisco Employment Law Attorneys

If you have questions about your obligations as an employer under the new law or want to make changes to agreements or policies, contact one of our Frisco employment today. Contact Simon Paschal PLLC for more information.


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