Congress this week passed HR 4445, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, which is expected to be signed by President Biden.

Background: Millions of Americans are forced to sign arbitration agreements as a condition of employment. These agreements result in waiver of the Constitutional right to a jury trial. These agreements force victims of wrongful termination and unlawful harassment  to bring their claims before supposedly “neutral” arbitrators. These arbitrators, however, are rarely neutral due to the “repeat player” effect — if an arbitrator renders a fair verdict for the employees, companies will simply refuse to choose that arbitrator again. Accordingly, arbitrators (who are paid by the employer) have a substantial financial disincentive to rendering a fair and just verdicts. To add insult to injury, these agreements almost always reduce the amount of discovery that the employee can obtain. This naturally favors the employer, which has little need for discovery because it employs all the key witnesses and holds all the key document. Companies require arbitration for one reason and one reason only: they want to rig the game.

HR 4445 is a game changer. This law, once enacted, voids (i.e. cancels) any arbitration agreement that prohibits a victim of sexual harassment or sexual assault from pursuing his or her claims in court. Victims will now get their day in court.

This reform is long overdue. Unfortunately, the act is limited to cases that have a sexual assault or sexual harassment claim. Victims of wrongful termination or other forms of unlawful harassment (racial, religious, disability, etc.) who signed arbitration agreements but do not have sexual harassment/assault claims will still be forced to litigate in kangaroo courts. Nonetheless, the law is a significant step forward that, hopefully, will build momentum for abolishing forced arbitration of employment and consumer disputes.