Trial Magazine

Despite the nearly impenetrable status of forced arbitration under the Federal Arbitration Act (FAA), as of Mar. 3, 2022, one category of employment claims is safeguarded—claims alleging sexual harassment or assault. The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA)¹ now invalidates forced arbitration agreements that would otherwise preclude litigants, including employees pursuing individual or class/collective action claims, from litigating sexual harassment or assault claims in court. It applies to any claims asserted under federal or state laws relating to sexual harassment or assault, regardless of the provisions of the FAA and its state analogs.

The conduct covered by the EFAA depends on state law, so be sure to check for the relevant state’s definitions of “sexual harassment” and “sexual assault.” Also keep in mind that the EFAA does not just apply to employment settings but has been used in a variety of other settings. However, note that the handful of courts that have analyzed challenges to forced arbitration under the EFAA have rejected retroactive application to claims arising or accruing before the act became effective.²

The EFAA expressly reserves the question of its own applicability to the courts, notwithstanding any provision in a private agreement otherwise delegating that determination to an arbitrator.³ Courts interpreting the EFAA’s scope so far have held that the floor of applicability turns on whether the complaint in question contains a plausible claim of sexual harassment or assault that can withstand a motion to dismiss at the pleadings stage.⁴ At least one court has held that when a plausible claim protected under the EFAA is pleaded, the entire case can proceed in court, notwithstanding other claims that would otherwise be subject to forced arbitration. If the sexual harassment or assault claim is dismissed, however, the EFAA protection is removed and remaining claims may be forced into arbitration.⁵

Miriam S. Edelstein is an attorney at Costello & Mains in Mount Laurel, N.J., and can be reached at medelstein@costellomains.com.

Notes

1. 9 U.S.C. §§401–402.
2. See Walters v. Starbucks, 623 F. Supp. 3d 333, 337 (S.D.N.Y. 2022); Olivieri v. Stifel, Nicolaus & Co., Inc., 2023 WL 2740846, at *6 (E.D.N.Y. Apr. 21, 2023); Johnson v. Everyrealm, Inc., 2023 WL 2216173, at *10 (S.D.N.Y. Feb. 24, 2023) (collecting cases).
3. 9 U.S.C. §402(b).
4. Johnson, 2023 WL 2216173, at *11 (EFAA applies and prohibits enforcement of forced arbitration for sexual harassment claim plausibly pleaded under the New York Human Rights Law.); Yost v. Everyrealm, Inc., 2023 WL 2224450, at *17 (S.D.N.Y. Feb. 24, 2023) (plausibility evokes the federal standards for analyzing the sufficiency of the allegations to support a claim in a Fed. R. Civ. P. 12(b)(6) motion to dismiss at pleading).
5. Yost, 2023 WL 2224450, at *18 (when the plaintiff’s sexual harassment claim has been dismissed as implausible, the EFAA no longer has any bearing on the litigation).