In February, Congress passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021. The new law amends the Federal Arbitration Act to forbid employers from requiring employees to agree to arbitrate sexual assault or sexual harassment claims under federal, state, or tribal law. I wanted to comment on the bill generally, and then raise a specific concern about it in the international context.
First, what do I think about the law from the perspective of an arbitrator? I do not serve as arbitrator in employment law cases,1 though I do serve I commercial and consumer cases, and the issue of “forced arbitration” comes up in the consumer context as it does in the employment context. I can’t speak for all arbitrators, but I happen to think that consumers, even consumers who don’t want to be there, get a very high quality of justice in arbitration. I understand the arguments that the Supreme Court has misinterpreted the FAA and applied it in contexts where it was never meant to apply, but given the law as it is, I don’t think consumers ought to reject arbitration out of hand. With that said, I think it is perfectly legitimate for Congress to say that certain kinds of cases belong in court and that parties cannot be compelled to arbitrate them. So I don’t have a problem with the goals of the bill. If Congress has decided that in this class of case, the importance of trial by jury, public trial, or public decisions justify amending the FAA, that’s fine by me.
But I do have some concerns about the details of the bill. The bill does not purport to void agreements to arbitrate sexual assault or harassment claims or to make such agreements invalid. Instead, it gives plaintiffs the option to make the agreement to arbitrate invalid. So it is possible that in a case where the employee wants to arbitrate and the employer doesn’t, the agreement to arbitrate is valid
Why is this important? Well, suppose that the agreement to arbitrate is within the scope of the New York Convention (for example, a foreign employee of a US employer, or vice versa). Under Article II of the Convention, states are required to recognize arbitration agreements that are “concerning a subject matter capable of settlement by arbitration.” Of course, states are free to say that certain disputes involving subject matters can’t be settled by arbitration, and they can refuse to confirm awards in such cases (art. V), But the United States hasn’t said that the subject-matter is not arbitrable. It’s just given the employee the power to opt out of arbitration if he or she chooses. Is this consistent with the Convention? I suppose we will know what the US courts think about this as cases start to be decided.