The Future of Forced Arbitration – What Employees and Employers Need to Know

What Employment Law Says About Forced Arbitration

You may have seen the news that in March of this year, President Biden signed into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, referred to as the EFAA. With the passage of the EFAA, employers are now prohibited from resolving sexual harassment and sexual assault claims with pre-dispute mandatory arbitration agreements, also known as forced arbitration. 

What is Forced Arbitration?

Forced arbitration, sometimes referred to as mandatory arbitration, prohibits an employee from suing their employer if they’re sexually harassed or sexually assaulted at work. If an employee does decide to go forward with a lawsuit, forced arbitration means there will not be a public hearing – instead, the employer hires a private arbitrator to agree on a resolution. Forced arbitration clauses are found in the fine print of many employment contracts

Recent Legislative Changes

As mentioned above, President Biden recently signed into law the EFAA, which brings about these key legislative changes:

  • For cases related to sexual assault or sexual harassment, employers may not enforce pre-dispute arbitration agreements.
  • Employees, however, can voluntarily choose arbitration as a resolution to their sexual harassment or sexual assault claim. 
  • Employers are also prohibited from using collective, class, or joint action waivers in an attempt to prohibit employees from participating in class or collective actions. 

Key Takeaways for Employees

As an employee, if you want to bring a sexual harassment or sexual assault case against you’re employer, under the EFAA you are entitled to a public hearing if that’s the route you want to take. Your employer cannot force you to go directly into arbitration. If you experience sexual harassment or sexual assault while at work, please contact an employment law attorney as soon as possible. 

Key Takeaways for Employers

As an employer, please consult with your labor and employment counsel as soon as possible, and consider that you may need to do the following:

  • Modify existing forced arbitration agreements that are in place with employees.
  • Hold sexual harassment trainings for your staff, as well as retaliation prevention trainings.
  • Ask your counsel to keep you informed of the latest provisions related to the EFAA. 

For more information about what the changes in employment law brought about by the EFAA mean for you, or if you have any other legal questions, please contact our team at SCC Legal today at:

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