Arbitration Ban Expected To Increase Claims Severity, EPLI Rates

Federal legislation forbidding mandatory arbitration in sexual harassment and assault cases will lead to higher legal costs and possibly higher employment practices liability rates, experts say.

H.R. 4445, the Ending Forced Arbitrations Sexual Assault and Sexual Harassment Act of 2021, passed Congress on bipartisan votes last month and is expected to be signed by President Joe Biden.

The measure would amend the Federal Arbitration Act and may create the complication of two-track litigation, where sexual assault and harassment charges are heard by a court and other charges in the same case are arbitrated.

While most employers do not require arbitration, those that do have such policies should review and revise them, experts say.

The measure forbids pre-dispute arbitration agreements in sexual harassment and assault cases and leaves it up to a judge to determine if it is applicable.