Predispute Employment Arbitration Agreements in Real Estate Industry After Enactment of New Limits

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 could have far-reaching implications for actual property employers that, like in many different industries, have relied on obligatory predispute arbitration agreements to resolve sexual harassment claims introduced by workers. The Act limits the use of predispute arbitration agreements and sophistication motion waivers protecting sexual assault and sexual harassment claims.

Many business and residential actual property corporations require property consumers to signal arbitration agreements. Arbitration usually is used as an alternative choice to litigation and is meant to be extra inexpensive and quicker than litigation. Relatively than a decide and jury deciding a case, an arbitrator that the events choose makes the choice. This can be preferable as a result of the events can choose an arbitrator with a background in actual property transactions, relatively than having a randomly chosen choice maker. If the arbitration is binding, which most are, there are typically no appeals through the use of this course of, so it has larger finality than litigation.

The Act

The Act supplies that an worker alleging sexual assault or sexual harassment in opposition to their employer might unilaterally invalidate a predispute arbitration settlement or class-action waiver. This implies workers might select to arbitrate these claims or pursue them in courtroom — individually or as class members or representatives — regardless of any contractual agreements with their employer.

The Act applies prospectively, which suggests it applies solely to sexual assault and sexual harassment claims that come up or accrue after it was signed into regulation, March 3, 2022, regardless of the date of the arbitration settlement at subject.

The Act shouldn’t have an effect on any settlement to arbitrate a dispute that had not but arisen on the time of the making of the settlement.

The Act doesn’t have an effect on in any other case legitimate arbitration agreements for claims aside from for sexual assault or sexual harassment.

Sensible Impression for Real Estate Employers

As an preliminary matter, employers might want to assess whether or not to proceed utilizing obligatory predispute arbitration agreements with workers, figuring out that sexual assault and sexual harassment claims have to be excluded from obligatory arbitration. Employers additionally might want to fastidiously take into account litigation technique and whether or not to hunt to implement present arbitration agreements. If an employer needs to proceed utilizing arbitration agreements, some steps ought to be taken.

Evaluate the prevailing arbitration settlement to find out whether or not it ought to be revised. Listed below are a number of issues for actual property employers:

  • Does the arbitration settlement have a severability provision?

  • Think about including an exclusion clause explicitly excluding claims for sexual assault and sexual harassment from the settlement.

  • In states the place it’s nonetheless permissible, take into account together with a jury trial waiver in the arbitration settlement for non-arbitrable claims.

  • Add language particularly requiring arbitration of claims which can be arbitrable the place included with non-arbitrable claims.

The Future for Real Estate Employers

Based mostly on the language of the Act, there will definitely be litigation over judicial interpretation. President Joe Biden’s Assertion of Administrative Coverage additionally foreshadowed doable further restrictions on the use of obligatory arbitration agreements. He acknowledged that his administration seems to be ahead to working with Congress on broader laws on different compelled arbitration issues involving race discrimination, wage theft, and unfair labor practices.

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