SimplyHR | Employment & Labor Blog 

The act took effect immediately and applies retroactively to arbitration agreements signed before March 3. However, it only prohibits mandatory arbitration with respect to new sexual assault or harassment claims made after its effective date.

Importantly, if a dispute arises regarding applicability of the new law, the act provides the dispute will be determined under federal law, and that validity and enforcement of arbitration agreements under the act shall be determined by a court, rather than by an arbitrator. Supporters of the act said it gives sexual assault and harassment victims the choice to pursue their claims in court rather than in a confidential arbitration, should they choose to do so.

What does this mean for employers that include mandatory arbitration clauses in their employment or confidentiality agreements? While mandatory arbitration clauses covering all claims (including sexual harassment claims) will not be found unenforceable in their entirety for including the prohibited claims, employers should review their agreements and consider excluding sexual assault and harassment claims from the mandatory arbitration requirements. Employers should also consider whether they are subject to any state laws that prohibit mandatory arbitration of certain claims in the event those state law prohibitions are more restrictive than those under the new federal law.

If you have questions about how these changes affect you, please contact an attorney in our Employment & Labor Practice Group.