California Courts Clarify Application of Federal Law Limiting Forced Arbitration of Cases Involving Claims for Sexual Assault and Sexual Harassment
The #MeToo movement resulted in significant changes to laws throughout the country including the March 3, 2022 enactment of the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), which amended the Federal Arbitration Act (FAA) to exclude sexual assault and sexual harassment claims from contracts with forced arbitration clauses, stating: “Notwithstanding any other provision of [the FAA], at the election of the person alleging conduct constituting a sexual harassment dispute . . . , no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the . . . sexual harassment dispute.”
This past year, California courts clarified the application of this law.
In early 2024, a California appellate court concluded in Kader v. Southern Cal. Medical Center, Inc., 99 Cal.App.5th 214 (2024), that a “dispute” arises under the EFAA when a party asserts a right, claim, or demand rather than when the alleged injury that led to that assertion occurred. Because there was no evidence of a disagreement or controversy in that case until the employee filed an administrative charge, which occurred after the arbitration agreement was signed, the EFAA barred enforcement of the arbitration agreement as to the employee’s claims even though the employee alleged that the sexual harassment took place before the arbitration agreement was signed. Subsequently, in Doe v. Second Street Corp., 105 Cal.App.5th 552 (2024) and Liu v. Miniso Depot CA, Inc., 105 Cal.App.5th 791 (2024), the appellate court further expanded the application of the EFAA, holding that its language exempts an employee’s entire case from compelled arbitration where there is at least one claim subject to the EFAA. A California federal court previously reached a similar conclusion in Turner v. Tesla, Inc., 686 F.Supp.3d 917 (2023), noting that, although the employee asserted both sexual harassment and non-sexual harassment claims, “the arbitration agreement [was] unenforceable with respect to [the employee’s] entire case because the core of her case allege[d] ‘conduct constituting a sexual harassment dispute’ as defined by the EFAA.”
These are important developments for California employers to consider when utilizing mandatory arbitration agreements.
This legal update and any use of its information does not create an attorney-client relationship. Nothing contained on this website should be considered legal advice for any specific employer or employment situation. Consult legal counsel before taking any action as a result of information contained herein.
