The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, effective March 3, 2022, invalidates arbitration agreements made prior to the emergence of a dispute related to sexual assault or harassment. Notably, the Act exclusively applies to disputes arising after its enactment. Consequently, for an arbitration agreement to be nullified under the Act, a dispute must arise subsequent to both the arbitration agreement date and March 3, 2022.
A critical issue prompted by the Act revolves around defining the term "dispute": does one arise at the time of alleged misconduct, or is a dispute contingent on the filing of an actual lawsuit concerning sexual harassment? The recent case of Kader v. Southern California Medical Center, Inc. (2024) sheds light on this matter.
Starting in 2018, an employee of Southern California Medical Center, Inc. began to be sexually assaulted and harassed by his supervisor, but refrained from disclosing it due to fear of repercussions. In 2019, the employee signed an arbitration agreement with the Center, waiving his right to pursue claims at trial.
Fast forward to May 2022, two months after the Act's passage, the employee initiated a lawsuit against the Center for years of sexual harassment. The Center responded by invoking the 2019 arbitration agreement that the employee had signed, but the court ruled that the agreement was invalid as the dispute arose after the Act's enactment and the agreement's signing.
On appeal, the Center argued that the dispute should be considered to have originated in 2018, emphasizing their interpretation that a "dispute" arises at the onset of the alleged misconduct. The Court of Appeal disagreed, holding that a "dispute" requires one party to assert a concrete right, claim, or demand contested by the other party.
Here, the Court of Appeal found that no genuine dispute existed before the 2019 arbitration agreement. The Court then concluded the dispute in this case manifested in May 2022, when the employee filed his lawsuit, invalidating the 2019 arbitration agreement.
This decision underscores that the Ending Forced Arbitration Act invalidates pre-dispute arbitration agreements for sexual harassment claims post-March 3, 2022. The Court clarifies that a "dispute" under the Act arises when a party asserts a right, claim, or demand, rather than at the time of alleged misconduct. To navigate the complexity of workplace sexual harassment claims, employers and employees are advised to seek guidance from qualified and competent employment counsel.