10-13-2026
Where an employee’s lawsuit includes a claim of sexual harassment, that employee may litigate all claims, even though the employee signed an agreement to arbitrate.
The federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA) amended the Federal Arbitration Act in 2022. Under the EFAA, employees cannot be forced to arbitrate “conduct constituting a sexual harassment dispute or sexual assault dispute” under federal, tribal, or state law when they file a lawsuit based on that sexual harassment or sexual assault.
In Diaz-Roa v. Hermes Law, the plaintiff alleged she was unlawfully fired after she tried to exercise her stock options in breach of her contract. She also claimed that the firm’s owner subjected her to sexual harassment during her employment. He allegedly encouraged her to flirt with clients and made comments about her appearance. Diaz-Roa filed a lawsuit, claiming breach of contract and sexual harassment under NY law. Hermes Law sought to compel Diaz-Roa to arbitrate her non-sexual harassment claims.
The Second Circuit Court of Appeals evaluated whether the plaintiff could be compelled to arbitrate her non-harassment claim. The defendant argued that the EFAA’s use of the word “case” referred to the individual harassment claim, not the entire lawsuit, and the court should sever her claims. The Second Circuit court rejected this argument, stating that the statute’s use of the word “case” is “widely accepted” as describing the whole judicial proceeding. The Second Circuit concluded that under the EFAA, the plaintiff was not compelled to arbitrate any of her claims. The Second Circuit’s decision is consistent with decisions reached by the Sixth and Ninth Circuits.
Takeaways: Employers in these circuits may be unable to enforce arbitration agreements as to any claims when a plaintiff alleges sexual harassment. Some state courts have reached similar decisions. Other circuits have not yet issued opinions on this question.