Second Circuit Rules that EFAA Invalidates Arbitration of Non-Harassment Claims in Harassment Cases

The Second Circuit Court of Appeals recently held that when the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA) applies to at least one claim in an employee’s lawsuit, the EFAA invalidates a pre-dispute arbitration agreement as to the entire lawsuit. This includes claims unrelated to sexual harassment or assault such as breach of contract and wage claims.

In Diaz-Roa v. Hermes Law, P.C., a senior employee filed sexual harassment, contract, wage and other claims against a law firm and another business entity. The defendants argued that the EFAA should have only permitted the employee’s harassment claim to be decided in court while the rest of the case belonged in arbitration under a pre-dispute arbitration agreement that the employee signed. 

The Second Circuit disagreed, finding that when a case involves a sexual harassment or sexual assault claim, the arbitration agreement is invalidated under the EFAA with respect to the entire case. The Sixth and Ninth Circuits have issued similar rulings.

Based on this decision, employers in New York, Connecticut, and Vermont should be aware that even if an employee signs an arbitration agreement, the inclusion of a claim related to sexual harassment or assault in a case involving other non-harassment claims could result in the entire case being litigated in court instead of arbitration.