Biden signs law ending forced arbitration for workplace sexual misconduct and signals upcoming FAIR ACT vote
By Karen Ocamb
It was the cusp of evening, March 3, Day 7 of Russia’s invasion of Ukraine. The Biden administration had asked Congress for $10 billion in emergency humanitarian and defense aid and imposed new sanctions on Russian oligarchs and elites that day, “ratcheting up the economic pressure on allies of President Vladimir V. Putin as his invasion of Ukraine intensifies,” the New York Times reported. The sun had started to set in Washington DC when the International Atomic Energy Agency announced that “a large number of Russian tanks and infantry” was moving toward the Zaporizhzhia nuclear power complex, the largest in Europe. Roughly an hour and a half later, the Russian army was firing indiscriminately and a fire had broken out. Memories of the 1986 Chernobyl nuclear disaster reverberated around the cable news networks
But for a brief time in the midst of that global chaos, there was order in the White House as the business of governing went on as usual. The East Room was bustling with energy and near euphoria as survivors of workplace sexual assault and harassment and their advocates waited for President Joe Biden to sign the long, hard-fought-for legislation, H.R. 4445, “Ending the Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.”
Vice-President Kamala Harris got the ceremony underway noting that as a senate co-sponsor five years ago, she believed the bill would “make our nation’s workplaces more safe and more just.”
“Forced arbitration silences survivors of sexual assault and harassment. It shields predators instead of holding them accountable and gives corporations a powerful tool to hide abuse and misconduct. And it compels the people of our nation — and most often the women of our nation — to sign away one of their most fundamental rights: the right to seek justice in court,” Harris said. “The legislation the President will sign today will end forced arbitration in all cases of sexual abuse. And — and almost equally as important, it will apply retroactively — invalidating every one of these agreements, no matter when they were entered into.”
Harris also flagged future legislation banning forced arbitration, though she did not specifically mention the FAIR Act. “As I think about the future, our administration will work with Congress on broader forced arbitration legislation to — ,” she said. “And we will do that to also protect the rights of workers in cases of wage theft, racial discrimination, and unfair labor practices.”
Biden took the podium and thanked former Fox News host Gretchen Carlson, the legislative leaders and the four survivors whose riveting testimony helped awaken legislators to the pain callous private rules can inflict on real people.
“You’re the survivors who led this historic reform. And thank you, thank you, thank you, on behalf of my daughter, my granddaughters, all my — all my family. Thank you so very much,” Biden said. “Between half and three quarters of all women report that they have faced some form of sexual harassment in the workplace. And too often, they’re denied a voice and fair chance to do anything about it. Today we send a clear and strong message that we stand with you for safety, dignity, and for justice.”
Biden explained the law to “the folks at home” whom he assumed were watching the live streaming signing ceremony, emphasizing how women — and sometimes men — who courageously reported sexual harassment or assault on the job suddenly found they had triggered a clause in their employment contract they might not have even known about — “a mechanism called ‘forced arbitration,’” Biden said.
“Forced arbitration isn’t court. In fact, forced arbitration prevents survivors from going to court. And under forced arbitration, proceedings are conducted in secret, often by arbitrators selected and paid for by the employer. And the outcomes of the arbitration are usually hidden from the public and the employees and coworkers, and they usually can’t even — and they can’t be appealed or can’t be overturned,” Biden said. “In some arbitration clauses, you can’t even acknowledge that you’re bringing the claim. And parenthetically, employees can still forbid — can still forbid — employers can still forbid people from talking about what happened to them through nondisclosure clauses. And I think that should be changed as well, but that’s another day.”
Yes, some survivors may want their claims resolved in private. “But some survivors will want their day in court. And that should be their choice and nobody else’s choice,” Biden said. “Giving the employer absolute power to decide isn’t how justice is supposed to work. It should be the choice of the employee about whether they want to go to court or not. I’ve made clear that — my belief that is no worker should have to make a commitment before any dispute has arisen to give their — up their access to justice in the courts when their rights — when they believe their right has been violated.
“Sixty million American workers are bound by forced arbitration clauses that were included in the fine print of their contracts. And many don’t even know they exist. You might have signed one without knowing it,” Biden continued. “I strongly believe no worker should have to make such a commitment. And that’s why I support legislation in the House of Representatives that’s going to consider com- — in the coming weeks that would prohibit mandatory arbitration of all types of employment disputes.”
Today, Biden said, “marks an important step in an effort to ban mandatory pre-dispute arbitration clauses that takes the power to choose how to pursue justice away from the worker. And I’m glad that there was a broad bipartisan support and unanimity in the United States Senate that we should never be forced — there should never be a forced arbitration clause for sexual harassment and/or assault. And, folks, this is, I think, a momentous day for justice and fairness in the workplace.”
And, the President added, the law is good for business. “I’d also argue that it is also good for the employers” to have the opportunity to address the issue. “Employers can’t successfully compete for the best workers if their workplace practices are unsafe and unjust. Employers, it puts you on the right side of the workers. And as Gretchen said, it puts you on the right side of history.”
BloombergLaw subsequently confirmed that the FAIR Act would come up for a House vote soon.
“Mandatory arbitration agreements are common in both employment and consumer agreements, and the FAIR Act (H.R. 963) would ban their enforcement. House Majority Leader Steny Hoyer (D-Md.) noted in a Feb. 25 letter to colleagues that it may be considered this month. His office confirmed that the vote will take place before the House recess the week of March 21,” BloombergLaw reported March 5.
Meanwhile, Sen Sherrod Brown introduced a bill ending forced arbitration to protect consumers. The Arbitration Fairness for Consumers Act would “prohibit banks and other financial institutions from using forced arbitration clauses against consumers who want to seek restitution and justice,” according to Brown’s office. “The Act amends Title X of the Consumer Financial Protection Act of 2010 to prohibit pre-dispute arbitration agreements and class-action waivers in contracts for consumer financial products or services. Under the Act, such agreements would be neither valid nor enforceable.”
“Forced arbitration clauses let big companies hide from accountability and silence victims, giving more power to Wall Street over workers and their families,” Brown said in a press release. “Too many consumers miss these and are tricked into signing away to corporations their right to pursue justice. This bill will remove these clauses to finally end this abusive practice for financial products and services, and give Americans a fighting chance against powerful special interests.”
Public Justice Executive Director Paul Bland and Board member Prof. Myriam Gilles, both experts on forced arbitration, testified at the “Examining Mandatory Arbitration in Financial Service Products” hearing before the Senate Committee on Banking, Housing and Urban Affairs on the morning of March 8. The hearing was live streamed and recorded. Bland and Gilles’ longer submitted testimony was also posted.
