The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“EFAA”) prohibits mandatory arbitration of sexual harassment and sexual assault claims. But what happens when an employee with an otherwise valid arbitration agreement brings multiple claims against their employer in court?
In an issue of first impression, the U.S. Court of Appeals for the Sixth Circuit (which covers Ohio, Michigan, Kentucky, and Tennessee) considered whether federal law bars arbitration of every claim in a sexual harassment case, not just sexual harassment claims.
What Happened?
In Bruce v. Adams and Reese, LLP, a paralegal at a law firm alleged claims for sexual harassment under Title VII of the Civil Rights Act and failure to accommodate her disability under the Americans with Disabilities Act (ADA).
Randi Marie Bruce had signed a valid arbitration agreement in 2022, requiring her to arbitrate “all claims, disputes or controversies” between her and the law firm arising out of her employment. After Bruce sued, the law firm filed a motion to dismiss her sexual harassment claim and to compel arbitration of her ADA claims, based on the parties’ arbitration agreement. The district court denied both motions, finding that Bruce had adequately stated a claim for sexual harassment and that the EFAA precluded arbitration of Bruce’s entire case.
The Court’s Decision
On appeal, the Sixth Circuit agreed, holding that Bruce had sufficiently alleged her sexual harassment claim, and that she could proceed in court on her disability claims as well. The Court reasoned that the EFAA’s inclusion of the term “case” instead of “claim” to describe when an otherwise-valid arbitration agreement is invalid and unenforceable indicated Congress’ intent to bar arbitration for all claims in sexual harassment cases.
The Court held that where a plaintiff brings multiple claims against a party with whom they have an otherwise-valid arbitration agreement, and one of the claims alleges a “sexual assault dispute” or a “sexual harassment dispute,” the arbitration agreement is unenforceable with respect to each of the plaintiff’s claims. Therefore, Bruce could move forward with her entire case in federal court.
The Sixth Circuit joins district courts in New York and the District of Columbia in concluding that the EFAA prohibits mandatory arbitration for all claims in a sexual harassment case. The Sixth Circuit is the first federal appellate court to address this issue.
Key Takeaways for Employers
This decision has major implications for employers within the Sixth Circuit that rely on arbitration agreements to resolve disputes and avoid public litigation. Now, when an employee plausibly alleges a sexual harassment or sexual assault claim, a pre-dispute arbitration agreement will be rendered unenforceable for the entire case. Unless employees ultimately agree to arbitrate those claims, employers should prepare to go to court. If you have questions about how this matter applies to your organization, please contact any K|W|W attorney.
