New York: Employees Can Avoid Arbitration for Claims Included with Sexual Harassment
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APPLIES TO All Employers with NY Employees |
EFFECTIVE As Indicated
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Discussion
A pair of cases in the Southern District of New York analyzed the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA). The EFAA prohibits employers from enforcing arbitration agreements for disputes involving sexual harassment or sexual assault. The two rulings state employees can also avoid arbitrating other claims brought alongside sexual harassment claims in the same case.
Johnson v. Everyrealm, Inc. On February 24, 2023, the District Court ruled the plaintiff’s entire case was exempt from arbitration under the EFAA because he plausibly pled claims for sexual harassment. Here, the plaintiff signed an employment agreement where he agreed to arbitrate any dispute or controversy arising out of or relating to a breach of the employment agreement. The plaintiff claimed during his employment, the Chief Executive Officer subjected him to comments that were unsolicited and unwanted sexual harassment in addition to jokes and comments about his race. After a series of questionable professional assignments, the plaintiff was placed on a thirty-day performance improvement plan. Ultimately, he was terminated without severance pay or a separation agreement. The plaintiff brought claims for race discrimination, pay discrimination, whistleblower retaliation, intentional infliction of emotional distress, and aiding and abetting claims.
The court agreed with the plaintiff that because his complaint included sexual harassment claims, it was not subject to arbitration. The court looked to the congressional intent of the EFAA in order to come to its ruling. The EFAA makes an arbitration agreement invalid “with respect to a case which is filed under Federal, Tribal, or State law and relates to the…sexual harassment dispute.” The text refers to a case and not a claim, therefore it extends to the entire dispute. Congress would have known the difference between the terms case and claim, therefore the intent was to void arbitration for an entire case that included sexual harassment or sexual assault claims.
Yost v. Everyrealm. On a separate case decided the same day against the same employer, the District Court ruled implausibly pled sexual harassment claims cannot be used to avoid arbitration of other claims. Here, the plaintiff was an independent contractor prior to becoming an employee working as the chief HR officer. As an independent contractor and an employee, the plaintiff signed agreements including mandatory arbitration clauses. While working for the employer, the employee said she was the target of and witness to sexually offensive remarks, jokes, comments, and questions. This included comments about the plaintiff’s open bisexuality. In addition, she suffered from attention deficit hyperactivity (ADHD) and alcohol-use disorders. The plaintiff also heard comments that mocked other employees with autism, ADHD, and intoxication. After the plaintiff and her children were diagnosed with COVID-19 and she was on sick and caregiver leave, the employer claimed she was violating or taking advantage of leave policies and the relationship rapidly deteriorated. The plaintiff objected to an allegedly discriminatory policy, and the employer interpreted her objection as a resignation. The plaintiff filed claims for pay discrimination, sexual harassment, hostile work environment, disability discrimination, whistleblower retaliation, and discrimination based on gender, sexual orientation, disability, and marital status.
In this ruling, the court found that the plaintiff’s evidence for the sexual harassment claim was insufficient. The statements that the plaintiff used to show sexual harassment were about other employees and were not addressed to the plaintiff. There were a handful of crude remarks that were disconnected from any protected characteristics of the plaintiff. Since the plaintiff’s lawsuit no longer concerned sexual harassment even in part, the EFAA no longer had any bearing on this case. The remaining claims were covered by a valid arbitration agreement and should be resolved in arbitration.
Action Items
- Review all claims covered by arbitration agreements with legal counsel.
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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase