Accessibility Tools

Skip to main content

The Latest      —

Federal Judge Denies Arbitration in Entire Case Where the Employer Failed to Exempt Sex Harassment Claim from Arbitration

Written on .

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA) barred arbitration agreement provisions that required employees to arbitrate sexual assault/harassment claims.  Most thought this law would simply remove those particular claims from overbroad arbitration agreements while allowing other claims in the case to proceed to arbitration.  However, a New York federal judge has applied the law very broadly, by ruling: "The Court construes the EFAA to render an arbitration clause unenforceable as to the entire case involving a viably pled sexual harassment dispute, as opposed to merely the claims in the case that pertain to the alleged sexual harassment."  Johnson v. Everyrealm, Inc. (S.D. N.Y, 2023).

Editor's Note - Plaintiff lawyers favor court litigation over arbitration because they believe that juries offer a better potential for sympathetic and large plaintiff verdicts.  This court ruling makes it likely that plaintiffs' lawyers across the country will try to add some type of sexual assault/harassment claim in court filings where they are aware that the employer has arbitration agreements requiring arbitration of employment claims.  Plaintiffs' lawyers may attempt to add frivolous sexual harassment claims to more viable claims in order to try to evade enforcement of a mandatory arbitration agreement for the entire lawsuit. 

It is likely that the Johnson case will be appealed and possibly reversed, because courts have interpreted the Federal Arbitration Act (FAA) to strongly favor upholding arbitration agreements.  This decision nevertheless represents a danger to employers wanting to enforce mandatory arbitration agreements.  Employers should expedite the review and amendment of their employment agreements to expressly exempt sex assault/harassment cases from the mandatory arbitration process.  This will ensure that claims not involving sexual assault/harassment can proceed to individual arbitration rather than ending up in court and a potential jury ruling. 

This article is part of our May 2023 Newsletter.

View newsletter online

Download the newsletter as a PDF

Related Content

Get Email Updates

Receive newsletters and alerts directly in your email inbox. Sign up below.
Promo graphic for webinar, TIPS: A Fresh Look at Tip Tax Exemptions & Their Implications
Have we reached the “tipping point”? Both Presidential candidates have proposed to exempt tips from tax, and a Texas court just invalidat...
we the people
In a case in Texas brought by SpaceX, a federal judge on July 10, 2024, explained his order blocking a case against SpaceX from proceedin...
board room
The National Labor Relations Board (NLRB or Board) decided to withdraw its appeal in a court decision vacating the 2023 Biden joint-emplo...
fencing practice
The Federal Trade Commission (FTC) rule scheduled to go into effect on September 4, 2024, banning the most common forms of non-compete ag...