One Harassment Claim Can Knock an Entire Case Out of Arbitration

Key Takeaways

• Plausible harassment claim blocks arbitration for whole lawsuit
• EFAA's "case" language applies to all claims in suit
• Sixth Circuit rejects claim‑by‑claim arbitration approach
• Dismissal of harassment claim may revive arbitration
• Plaintiffs may add harassment allegations strategically

Summary

The Sixth Circuit ruled that under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA), a plausibly alleged sexual‑harassment claim renders a pre‑dispute arbitration agreement unenforceable for the entire lawsuit, not just the harassment claim. In the case, the employee’s Title VII harassment allegation kept her ADA claims in federal court, overturning the employer’s bid to compel arbitration. The court emphasized the statutory use of the word “case,” meaning the whole action. This interpretation aligns with a growing consensus among district courts.

Pulse Analysis

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act was enacted to curb mandatory arbitration in sensitive workplace disputes. While many employers have embedded broad arbitration clauses in employment contracts, the statute’s language—specifically the term “case”—has been the focal point of judicial interpretation. By treating the entire lawsuit as a single case, courts can prevent arbitration from being applied to any claim once a sexual‑harassment dispute is plausibly alleged, thereby preserving a plaintiff’s right to a judicial forum for all related claims.

In the recent Sixth Circuit decision, the court rejected the employer’s claim‑by‑claim reading of the EFAA and held that the presence of a viable harassment claim bars arbitration for the ADA claims filed alongside it. This approach mirrors rulings in other jurisdictions that have adopted a holistic view of the statute, signaling a unified trend toward broader protections for employees. The decision underscores the importance of precise statutory construction and highlights how a single allegation can dictate the procedural pathway for an entire employment case.

For businesses, the ruling mandates a reassessment of arbitration strategies. Employers should consider drafting arbitration agreements that explicitly address the EFAA’s scope or include carve‑outs for harassment claims, while also preparing for heightened scrutiny of pleadings. Litigation teams may need to prioritize early motion practice to dismiss or narrow harassment allegations, as a dismissed claim could reopen arbitration for remaining issues. Ultimately, the decision encourages more strategic pleading and risk‑management practices to mitigate the potential loss of arbitration’s cost‑saving benefits.