Post Authored By: Whitney Barr
On February 7, 2022, the House of Representatives passed House Bill 4445, Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021. The bill ends forced arbitration of sexual harassment and sexual assault claims. It had overwhelming bipartisan support, passing 335 to 97. All House Representatives from Illinois voted yes on the bill, with the exception of four Republican representatives: Mike Bost, Rodney Davis, Darin LaHood, and Mary Miller. The Senate subsequently passed the bill by voice vote on February 10, 2022. The bill was signed into law by President Biden on March 3, 2022.
The new legislation would amend The Federal Arbitration Act (FAA) and put an end to any dispute as to whether the FAA preempted state laws seeking to prohibit mandatory pre-dispute arbitration regarding employee sexual harassment claims. Arbitration is an out-of-court method for resolving a dispute and takes place in front of an arbitrator or a panel of arbitrators who will listen to each side and make a determination in the case. Forced arbitration requires an individual to submit any dispute that may arise to binding arbitration as a condition of employment or a service.
The newly passed law applies retroactively, invalidating any existing agreement which forces parties to arbitrate sexual harassment and sexual assault disputes. If a dispute does arise, an employee and employer can agree to arbitrate sexual harassment and sexual assault disputes provided such agreement arises only after the dispute occurs and the employee agrees in writing. This arrangement allows the employee to have a meaningful choice to arbitrate their claim in the event they want to protect sensitive or private information.
Forced arbitration exists outside of the employment context as well. Forced arbitration clauses are omnipresent in corporate and consumer agreements. The United States Supreme Court addressed these arbitration clauses in 2011 in the case AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1748 (2011). The Court held that the FAA allows corporations to force injured or harmed individuals into forced arbitration systems. The Court further held the FAA trumps any existing state law that has been enacted to help resolve commercial disputes between businesses. Since the Concepcion opinion was issued, the prevalence of forced arbitration clauses in corporate agreements sharply increased.
Critics of forced arbitration argue that the process disfavors employees or consumers, who win less frequently, or receive damages that are less than what they would have been awarded in court. Critics further argue that an arbitrator is not always a neutral third party. Corporations can retain arbitrators to settle their disputes, and therefore the arbitrators may have an incentive to be biased towards the corporation. At times, arbitration clauses may obligate the individual subject to the agreement to bear the costs of arbitration or bind them to confidentiality. Unfortunately, there is no right to appeal in arbitration if the remedy is unjust. Legal scholars note the significance of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, and question if the new law signals a shift in how arbitration will be utilized from now on beyond the employment law context.
About The Author:
Whitney Barr is an attorney at David A. Axelrod & Associates. Whitney graduated from Saint Louis University School of Law in May of 2021 where she was a teaching fellow and member of the SLU National Moot Court Team. Whitney was also a student-attorney in the Human Rights Clinic where she pursued impact litigation. She is licensed to practice in Illinois and Missouri. Whitney is passionate about social justice and maintains a commitment to public service via pro bono work and volunteering.