Many employers have adopted arbitration agreements to limit costly employment litigation, potential runaway juries, and workplace disputes that become tried in the court of public opinion. But employers should reconsider their legal strategy in light of a recent amendment to the Federal Arbitration Act (FAA) resulting from the #MeToo movement, the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” This Act was passed by Congress and became effective on March 3, 2022, when it was signed by President Biden.

As employers who have adopted arbitration agreements are likely aware, many state legislatures have sought to limit the use of arbitration in workplace disputes, including Washington and California. Courts have sometimes found these state laws to be preempted by the FAA, so Congress’s passage of this amendment to the FAA could eliminate that potential roadblock.

This new federal law applies to arbitration clauses and joint, class or, collective action waivers in any agreement signed before an incident of workplace sexual harassment or assault. Unlike other laws that seek to prohibit the use of arbitration, this law allows the employee to choose whether to go straight to court to pursue sexual assault or sexual harassment claims, or alternatively, to pursue those claims in arbitration if the employee has agreed to arbitration. The law clearly states that this is the employee’s “election”: More