Challenging Compelled Arbitration in Sexual Harassment Claims

California law has long been designed to protect employees from mistreatment in the workplace, especially regarding issues like sexual harassment. But despite these protections, employers have often found ways to sidestep the intent of these laws by using arbitration clauses to handle disputes outside the courtroom, generally to their advantage. Arbitration, typically a faster and less public process than court trials, can sometimes lead to outcomes more favorable to employers. California addressed this issue in 2022 with the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA), which prevents mandatory arbitration in cases involving these serious issues. This law faced a critical test recently when an employer appealed a court ruling that denied their motion to force a sexual harassment case into arbitration.

The Facts of the Case

In February 2023, a plaintiff filed a lawsuit against her employer, a hotel, and two supervisors, citing multiple grievances, including sexual harassment and a hostile work environment. The events that led her to take legal action began in 2019 when a coworker assaulted her, after which she reported the incident and requested that she not be scheduled to work with him. Despite this request, the hotel continued to assign them overlapping shifts, causing her anxiety and distress. In 2021, the hotel hired a new director, who became aware of her assault and was instructed to avoid scheduling the plaintiff and her assailant together. However, the new director pressured her to recount the details of the assault, suggesting she would need to work with her assailant if she refused to talk. After the plaintiff complied, the director placed blame on her, and her schedule continued to overlap with her assailant’s regularly. In 2022, another supervisor falsely claimed that the plaintiff had a consensual relationship with her assailant, further intensifying her distress. Following a panic attack and suicidal thoughts, she was placed on a psychiatric hold in May 2022 and was advised not to return to her job.

The Plaintiff’s Arguments

In her lawsuit, the plaintiff argued that the conduct she endured at the hotel created a hostile work environment and constituted retaliation, among other claims. The hotel’s defense sought arbitration, citing a 2016 employee handbook requiring arbitration in all employment disputes. However, the plaintiff opposed this, pointing to the EFAA, which became effective in March 2022 and prohibits arbitration in sexual harassment cases. She argued that her harassment claims arose after the EFAA’s effective date, rendering the arbitration clause unenforceable. She also noted that a more recent 2018 handbook did not include an arbitration clause, raising further doubts about its applicability. Finally, she argued that the arbitration agreement itself was both outdated and fundamentally unfair under California law.

The Court’s Ruling

The trial court agreed with the plaintiff, denying the hotel’s motion to compel arbitration. The court found that the plaintiff’s claims fell under the EFAA because they had accrued after its effective date, which meant that the arbitration clause could not be enforced for any part of her lawsuit. In other words, the court determined that the entire case could move forward in court because of the presence of the sexual harassment allegations. In response, the hotel appealed the decision, hoping to compel arbitration by arguing that only her amended complaint added claims covered by the EFAA. But the court maintained that even the original complaint contained allegations of harassment that occurred after March 2022.

The appellate court reviewed the decision and ultimately upheld it, agreeing that the EFAA applied to the plaintiff’s case. This ruling was based on the understanding that the EFAA, by using the term “case” rather than “claim,” applies to the entire legal proceeding and not just individual claims. Citing recent federal court interpretations, the court reasoned that Congress deliberately chose the broader term “case” in the EFAA to ensure that when any part of a lawsuit involves sexual harassment, the entire matter is exempt from arbitration. This ruling reflects an appellate court’s willingness to interpret California and federal laws in ways that robustly protect employee rights, underscoring the importance of getting a favorable initial ruling when navigating these complex legal questions. When claims reach the appellate level, plaintiffs often find appellate courts more protective of employee rights than trial courts, which can make a critical difference in the final outcome.

California workers who face workplace harassment or discrimination have a right to pursue justice and defend themselves in court. However, navigating these protections often requires an attorney with extensive knowledge of California employment laws. With the complexities involved, including laws like the EFAA, finding an attorney with the right expertise can mean the difference between securing compensation and facing disappointment. California employees dealing with misconduct cases need someone who understands the details of employment law and can secure the right outcome from the beginning.

Stand Up in the Face of Harassment

If you or someone you know has experienced workplace harassment, discrimination, or other employment issues, reach out to the Harden Law Group for a free consultation. Our experienced California employment law attorneys specialize in California and federal employment protections and have a proven track record of helping clients secure the compensation they deserve. Contact us at (949) 337-4810—let our knowledge and experience work for you to achieve the best results in your case.