#MeToo message received: Congress nixes arbitration clauses

Viewed as a risk mitigation tool, arbitration clauses are included in employment contracts and policies to route employer/employee disputes to a private forum and outside of the courthouse. Employers are attracted to such clauses because they are believed to be cost-effective and a confidential resolution of claims. As part of the #MeToo movement, however, such clauses are scrutinized, suggesting they tip the playing field in an employer’s favor. Fueled by Fox News’ highly publicized sexual harassment case filed by former anchor Gretchen Carlson, Congress passed a bill on February 10, 2022, that invalidates employer/employee agreements for sexual assault and sexual harassment cases. President Joe Biden signed the bill into law on March 3.

What the new law says

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 stops existing clauses whether they are in employee contracts or policies. It won’t affect disputes currently in arbitration but will apply future-forward. Further, the law contains an employee choice provision wherein employees may elect arbitration if they are drawn toward a more private forum, but they may not be forced into arbitration or bound by an agreement.