Revisiting the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (EFAA)

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA) went into effect on March 3, 2022. As an amendment to the Federal Arbitration Act (FAA), the legislation permits individuals alleging sexual assault and harassment to bypass forced arbitration under the FAA and pursue their claims in court. (9 USC § 402(a).)

The concept of “forced arbitration” usually refers to arbitration procedures found in individual employment agreements required upon hire, and not to arbitration pursuant to collectively bargained agreements between a union and employer. 

Since its inception, courts have elaborated on the EFAA’s key provisions, much to employers’ chagrin. The EFAA has been the subject of several lawsuits and decisions interpreting its parameters. Federal district courts and California state courts have ruled that the EFAA only pertains to claims or disputes that arise after March 2022. However, some federal district courts have allowed the EFAA to apply, even if not all events leading to a sexual harassment claim occurred after its effective date of March 3, 2022. (See, e.g, Turner v. Tesla (N.D. Cal. August 11, 2023 No. 23-cv-02451) __ F.Supp.3d __ [2023 WL 6150805].) 

In addition, courts have generally construed the EFAA to protect other kinds of claims that are related to sexual harassment or sexual assault allegations. For example, a federal court in New York ruled that all claims related to a sexual harassment claim, such as whistleblower or retaliation claims, are exempt from arbitration. (Johnson v. Everyrealm, 657 F.Supp.3d 535 (S.D.N.Y. February 24, 2023).) Similarly, the court in Turner v. Tesla held that all claims that were “substantially related” to the sexual harassment claim, i.e., all claims that arose out of the same set of facts and circumstances, were exempt from forced arbitration agreements under the EFAA. However, another court found that claims entirely unrelated to the sexual harassment claim, such as a class action wage-and-hour-claim, were not subject to the EFAA’s exemption. (Mera v. SA Hospitality Group, (S.D.N.Y. Jun. 3, 2023 No. 1:23-cv-03492) __F.Supp.3d __ [2023 WL 3791712].) 

While appellate courts have yet to affirm these interpretations, the consensus among multiple district courts provides insight into the broader application of the EFAA in future cases. The EFAA is shaping up to be a powerful tool in the larger battle against forced arbitration of discrimination and harassment claims, and potentially related claims as well.

For more information, contact your labor law counsel.