Many employers enter into mandatory arbitration agreements at the time an employee is onboarded with the expectation that employment claims will be resolved in an alternate-dispute-resolution forum. When an employee files suit in court, the employer moves to compel arbitration.
However, the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA) enacted in 2022 has significantly changed the landscape for employment arbitration agreements, including in California. While arbitration agreements remain broadly enforceable, the EFAA creates an important exception that employers must account for in their policies and practices.
Employees Elect the Forum
The EFAA amends the Federal Arbitration Act to give employees alleging sexual harassment or sexual assault the right to elect whether to pursue their claims in court, even if they previously signed a mandatory arbitration agreement that would otherwise apply to the disputes between the parties. In other words, pre-dispute arbitration provisions are no longer automatically enforceable for these types of claims. The decision of whether to arbitrate or litigate rests solely with the employee.
Every published California case has ruled that the EFAA’s language precludes arbitration of the entire case, not just those claims that relate to sexual harassment of assault. (See, e.g. Quilala v. Securitas Security Services USA, Inc. (2025) 117 Cal. App. 5th 75, 88-89.) That means even non-harassment claims such as wage and hour law violations, discrimination and wrongful termination would be resolved in court, not in an arbitration.
Plaintiffs’ attorneys are increasingly including tenuous claims of sexual harassment and assault in employment law cases to defeat otherwise valid arbitration agreements. Additionally, plaintiffs’ lawyers sometimes conflate sexual harassment with gender discrimination, which is not subject to the EFAA.
For California employers, this development is significant because arbitration agreements have long been a common tool to manage litigation risk and control costs. Many employers rely on arbitration to avoid jury trials, streamline disputes and limit exposure to class actions. The EFAA carves out a category of claims that may proceed in court regardless of the agreement in place.
What Employers Should Consider
- Employers should review their arbitration agreements and employment policies with the EFAA in mind. Agreements should be evaluated to ensure they are consistent with current law and limitations imposed by the EFAA. Even a well-drafted arbitration agreement may not apply to the dispute if a plaintiff combines EFAA and non-EFAA claims.
- When a dispute arises either through a demand letter or lawsuit, it is important to promptly evaluate whether the sexual harassment/assault claim is meritorious, sufficiently pled and can survive the pleading stage. That will impact the arbitrability of an action.
- Plan for the possibility that one well pleaded sexual harassment/assault claim may cause the entire action to go to court. That will affect litigation risk assessment, motion strategy and arbitration strategy from the outset of the case.
If you have questions about how the EFAA and related California cases may affect your arbitration agreements, employment policies or litigation strategy, contact us.