Law Alert: New Federal Arbitration Law - Impact on Transportation Providers
February 14, 2022
Late last week, Congress passed H.R. 4445, the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” President Biden is widely expected to sign the bill into law. The bill grew out of the #MeToo movement and received broad, bipartisan support.
Once enacted, the law will prohibit pre-dispute agreements to arbitrate claims of sexual assault and sexual harassment, both of which are defined in the legislation. It will also prohibit pre-dispute class waivers relating to such claims, regardless of whether those waivers are in arbitration agreements. In other words, the law will apply to “stand-alone” class waivers of sexual assault and sexual harassment claims that might exist in a contractor’s operating agreement or an employee handbook.
The primary provisions of the new law appear to fall outside of the Federal Arbitration Act (FAA). However, the law does amend certain parts of the FAA to ensure that the new provisions concerning sexual assault and harassment claims apply “notwithstanding” anything to the contrary found in the FAA.
Our arbitration team is closely monitoring developments concerning the new law. They share the following key takeaways for transportation providers:
- Many drivers (whether employees or independent contractors) are exempt from the FAA as “transportation workers,” leaving the parties to arbitrate under applicable state law. However, because the primary provisions of the new law appear not to be part of the FAA, they may still reach agreements with your drivers. In addition, several states have passed similar laws prohibiting mandatory arbitration of similar claims, and some of these prohibitions extend beyond sexual harassment and assault.
- The prohibition on stand-alone class waivers only applies to claims involving sexual assault or harassment, not any other claims, including those typically faced by transportation companies (e.g., the Federal Leasing Regulations, the Fair Labor Standard Act, state wage-and-hour laws).
- The title of the law suggests it will only apply to “forced” or “mandatory” arbitration agreements. But, as drafted, the new law’s application does not appear to depend on whether the agreement was mandatory, meaning that even voluntary pre-dispute agreements may be subject to challenge. Thus, even if you have voluntary arbitration agreements with your drivers—or give them the right to “opt out” of the arbitration agreement after signing it—the new law may still apply with respect to sexual assault and harassment claims they assert.
- The law applies to any claim of sexual assault or harassment that arises after its effective date. Thus, it will not apply retroactively (i.e., to existing claims). However, it will likely impact arbitration agreements (and stand-alone class waivers) you have entered into already, to the extent they cover claims for sexual assault and harassment that arise post-enactment.
If you have arbitration agreements with any of your workers, now is the time to review those agreements to ensure they align with recent developments in the law.