Amanda DeMatteis: Hi, Josh.
Josh Goodbaum: Hi, Amanda. What are we talking about today?
DeMatteis: We’re talking about the Ending Forced Arbitration Act that President Joe Biden signed into law back in 2022. However, the Second Circuit just had the opportunity to interpret it. What do we need to know?
Goodbaum: The law here, Amanda, is the Ending Forced Arbitration of Sexual Harassment and Sexual Assault Act, and as you said, it was passed by Congress in 2022, and it is a law that creates a carve-out from the Federal Arbitration Act.
The Federal Arbitration Act requires that most agreements to arbitrate are enforced, regardless of the subject matter of the underlying dispute. But the EFAA says, “Hold on a minute. If the subject matter of that dispute is sexual harassment or sexual assault, then the employee who is alleging sexual harassment or sexual assault cannot be forced to arbitrate that dispute.”
In other words, all of those predispute arbitration agreements that would otherwise force arbitration of a sexual harassment or sexual assault dispute are not enforceable, and that applies not just to the claim of sexual harassment or sexual assault, but to any case that, quote, “relates to” that dispute.
The question for the Second Circuit was how big that waiver is. Does the waiver apply to just the sexual harassment or sexual assault claim, in which case any other claims still need to be arbitrated, or does it apply to the whole case? And the Second Circuit, in a case called Diaz-Roa versus Hermes Law, decided that the act applies to the entire case.
So in that case, the plaintiff brought a claim for sexual harassment, but also a claim for breach of contract, and the Second Circuit said, the sexual harassment claim we know cannot be arbitrated, or the plaintiff rather cannot be forced to arbitrate that claim, and likewise, the plaintiff cannot be forced to arbitrate the breach of contract claim either.
The Second Circuit left open the question of what happens when the plaintiff just throws in a sexual harassment or sexual assault claim in order to get out of arbitration entirely, even though there isn’t really a sexual harassment or sexual assault claim to be pursued. They’re gonna have to discuss that another day, but for now, what employees and their lawyers need to know is if the employee is bringing a sexual harassment or a sexual assault claim, that is a case that cannot be forced into arbitration.
And what does that mean? It means that the case is going to see the light of day, and that is exactly what Congress wanted. They wanted the judges and juries in our judicial system to be determining the outcome of sexual harassment and sexual assault cases, not arbitrators who are sworn to confidentiality.
DeMatteis: Some critical information for litigants to understand four years after this became law. Thank you so much for this information, Josh, and thank you for watching. We’ll see you next time.