March 2022, Congress enacted a law that stops employers from requiring employees to arbitrate disputes related to sexual assault or harassment. The new act, formally known as the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFASASHA), went into effect immediately. Employment lawyers need to understand the Act and consider how it should affect their practice.

EFASASHA amends the Federal Arbitration Act to specify that victims of sexual assault or harassment can pursue claims in court and on a class-wide basis, even if they are bound by a predispute arbitration agreement. It applies to all agreements covered by the FAA, and thus many consumer claims as well as employment claims. Congress may soon pass a separate bill, the Speak Out Act, that would preclude enforcement of predispute nondisclosure and non-disparagement clauses in such cases.

As courts begin to resolve claims under the new law, two key issues are likely to arise. 

1. What counts as a “sexual assault” or “sexual harassment” dispute?

2. If a case includes both a covered dispute and other claims, will the whole matter be resolved in court, or will some claims be resolved in court and other claims in arbitration? 

“Sexual harassment dispute” is defined as a “dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.” Federal employment statutes do not explicitly define sexual harassment. A large body of case law considers when workplace harassment is unlawful discrimination on the basis of sex. 

Under Supreme Court precedent, this includes both harassing conduct that ultimately culminates in a tangible employment action and conduct that is “severe or pervasive” enough to constitute an abusive environment. The conduct does not need to be sexualized or motivated by sexual desire. It may include harassment based on a general hostility to either sex, failure to conform to sex-based stereotypes, a victim’s sexual orientation or gender identity, or pregnancy or lactation. A harasser may be the same sex as the victim, so long as the evidence shows that the harassment was “because of sex.”

In statutory interpretation, when Congress uses different words—here “case” and “dispute”— within a single provision, it’s typically assumed to be a meaningful variation. In context, this suggests that the exception applies to an entire case that includes a sexual assault or harassment dispute, so long as the claims are “related.” 

EFASASHA incorporates legal standards from elsewhere in the law to define “sexual assault” and “sexual harassment” disputes. The former is “a dispute involving a nonconsensual sexual act or sexual contact,” as defined in federal criminal law. This includes any “intentional touching, either directly or through clothing” of sexualized areas of the body with an intent to abuse, humiliate, or gratify sexual desire, as well sexual acts involving genitalia regardless of intent. While the standard is derived from the criminal law, EFASASHA does not state the sexual assault must have been prosecuted. Rather, the victim simply must be “alleging” at least one incident that meets the definition.

For example, if a victim alleged that her refusal to accept a sexual proposition was related to a subsequent failure to pay her overtime, a court would properly resolve discrimination and retaliation claims under Title VII and also any Fair Labor Standards Act (FSLA) claim. If, by contrast, the failure to pay overtime was a longstanding issue that preceded and was unconnected to any potential harassment, the court might address only the discrimination claim and send the FLSA claim to arbitration. That said, employers and their lawyers may determine that it is more efficient to resolve all the claims in a given lawsuit in court, once it’s clear some are covered by EFASASHA.

Overall, as a result of statutory changes, management counsel review their clients’ policies regarding arbitration and plaintiffs’ counsel should recognize victims of sexual assault or harassment can now choose to pursue claims in court, regardless of what may be defined in an arbitration agreement. EFASASHA is essential to limitations on mandatory arbitration provisions, and it can fill a key role in helping interpret the complexities of sexual assault and harassment in American workplaces.

Federal Guidelines

The U.S. Equal Employment Opportunity Commission (EEOC) encourages all employers to provide harassment prevention training to all employees, regardless of state laws. This is to ensure a safe and respectful workplace environment.

Employers should be aware of their responsibilities under both state and federal laws to prevent and address sexual harassment effectively.

FLSA and EFASASHA -- State Law

The National Women’s Law Center reports that in response to #MeToo, several states have laws similar to EFASASHA addressing sexual harassment and arbitration. The state laws cover smaller employers than federal law does, and some also allow interns, volunteers, and independent contractors, in addition to employees, to bring claims. 

Several states have extended the statute of limitations, and some have rejected the federal “severe or pervasive” standard in favor of a broader conception of actionable harassment. Harassing conduct may also give rise to state common law claims such as assault, battery, and negligent or intentional infliction of emotional distress.

Many states have their own laws regarding sexual harassment that complement the federal Fair Labor Standards Act (FLSA). These laws often require employers to provide sexual harassment training, establish reporting procedures, and take steps to prevent harassment in the workplace, with specific requirements varying by state.

Legal Resources for Harassment Claims

Findlaw

Legalmatch

Employmentlawhelp.org

Calcivilrights.ca.gov

EEOC.gov

The Law

9 U.S. Code Chapter 4

ARBITRATION OF DISPUTES INVOLVING SEXUAL ASSAULT AND SEXUAL HARASSMENT

Sec. 401

(1) Predispute arbitration agreement.—

The term “predispute arbitration agreement” means any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement.

(2) Predispute joint-action waiver.—

The term “predispute joint-action waiver” means an agreement, whether or not part of a predispute arbitration agreement, that would prohibit, or waive the right of, one of the parties to the agreement to participate in a joint, class, or collective action in a judicial, arbitral, administrative, or other forum, concerning a dispute that has not yet arisen at the time of the making of the agreement.

(3) Sexual assault dispute.—

The term “sexual assault dispute” means a dispute involving a nonconsensual sexual act or sexual contact, as such terms are defined in section 2246 of title 18 or similar applicable Tribal or State law, including when the victim lacks capacity to consent.

(4) Sexual harassment dispute.—

The term “sexual harassment dispute” means a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.

(Added Pub. L. 117–90, § 2(a), Mar. 3, 2022, 136 Stat. 26.)

Sec. 402

(a) In General.—

Notwithstanding any other provision of this title, at 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 predispute arbitration agreement or predispute 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.

(b) Determination of Applicability.—

An issue as to whether this chapter applies with respect to a dispute shall be determined under Federal law. The applicability of this chapter to an agreement to arbitrate and the validity and enforceability of an agreement to which this chapter applies shall be determined by a court, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement, and irrespective of whether the agreement purports to delegate such determinations to an arbitrator.

(Added Pub. L. 117–90, § 2(a), Mar. 3, 2022, 136 Stat. 27.)