Forced Arbitration and Sexual Harassment Claims: What California Employees Need to Know
Most employees never read the arbitration agreement they signed on their first day. It was buried somewhere in the onboarding packet, between the direct deposit form and the handbook acknowledgment. It only becomes important later — usually at the worst possible moment, when something has gone wrong at work and you are trying to figure out your options.
What Is Arbitration?
Arbitration is a private dispute resolution system. Instead of filing your case in court and having it heard by a judge and a jury, your case is decided by an arbitrator appointed through a private company. The arbitrator is usually a retired judge or a lawyer who no longer practices. There is no courtroom, no public docket, and no jury box.
Is Arbitration Good for Employees?
It depends on who you ask, but there are structural reasons employees tend to fare worse.
You lose your jury. Your case is decided by one individual whose fee is being paid — in most employment cases, largely or entirely — by your employer or former employer. A jury of your peers is replaced by a single decision-maker inside a system your employer selected.
Outcomes tend to be worse. It is generally more difficult to prevail in arbitration, and when employees do win, awards are typically far lower than what a jury would award. Arbitrators are less likely to issue the kind of significant damages verdicts that hold employers accountable.
Repeat business matters. Employers and their defense firms appear before the same arbitration providers over and over. Employees appear once. That asymmetry shapes the environment even where individual arbitrators act in good faith.
Appeal rights are minimal. Court judgments can be appealed on legal error. Arbitration awards generally cannot. Even a clearly wrong result is usually final.
It is private. There is no public record, no press coverage, no precedent for the next employee who experiences the same conduct. For employers, that confidentiality is a feature. For accountability, it is a problem.
The promised efficiency often does not materialize. Arbitration is marketed as a speedy, cost-effective alternative to litigation. In practice, it rarely is. Arbitrations can stretch over multiple years and involve the same motions, written discovery, depositions, and briefing you would see in court — just without the jury at the end.
The Good News: The EFAA
There is one category of claim that is always exempt from forced arbitration.
In March 2022, Congress passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA), which amended the Federal Arbitration Act. Under the EFAA, a person alleging sexual harassment or sexual assault can decline to be bound by a pre-dispute arbitration agreement and take the case to court instead.
Several features of the law are worth understanding:
The choice belongs to the employee. The employer cannot force the case to court, and it cannot force the case out of it. The person alleging harassment elects whether to enforce or void the agreement.
It applies to agreements signed before the dispute arose. The typical onboarding arbitration agreement — signed long before anything happened — is exactly what the statute targets.
A court decides whether the EFAA applies. Many arbitration agreements contain “delegation clauses” saying the arbitrator decides arbitrability. Under the EFAA, that question goes to a judge.
It can exempt your entire case. This is the part that matters most in practice. If you have multiple claims, courts have held that a single sexual harassment claim can keep the whole case in court. Related claims — wrongful termination, retaliation, failure to prevent harassment, wage claims — travel with it rather than being split off into arbitration.
For California employees, this is significant. Many California employers require new hires to sign arbitration agreements as a condition of employment. An employee alleging harassment based on sex, sexual orientation, gender, gender identity, or gender expression may invoke the EFAA and litigate publicly, before a jury.
What Is Sexual Harassment?
Sexual harassment is unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature. It becomes unlawful harassment when:
- submission to the conduct is made, explicitly or implicitly, a term or condition of employment;
- submission to or rejection of the conduct is used as the basis for employment decisions affecting that individual; or
- the conduct has the purpose or effect of unreasonably interfering with work performance or creating an intimidating, hostile, or offensive working environment.
“Unwelcome” is the critical word. Unwelcome does not mean involuntary. A person may consent to certain conduct, and even actively participate in it, while still finding it offensive and objectionable. People laugh along, go to the work happy hour, or reply to the text because they are afraid of the consequences of refusing. Sexual conduct is unwelcome whenever the person subjected to it considers it unwelcome. Whether someone actually welcomed a request for a date, a sex-oriented comment, or a joke depends on all the circumstances.
Conduct that can constitute sexual harassment includes:
- Actual or attempted rape or sexual assault
- Pressure for sexual favors
- Touching, leaning over, cornering, or pinching
- Sexual looks or gestures
- Emails, texts, telephone calls, or sexual materials
- Pressure for dates
- Sexual teasing, jokes, remarks, or questions
- Making work about sexual topics
- Sexual innuendos or stories
- Asking about sexual preferences, social life, or sex life
- Comments about a person’s clothing or looks
- Spreading rumors about a person’s personal sex life
- Giving personal gifts
- Hanging around a person
- Hugging, kissing, or stroking
- Standing close or brushing up against a person
- Looking a person up and down or staring
Quid Pro Quo Harassment
Quid pro quo harassment occurs when employment decisions are based on an employee’s acceptance or rejection of unwelcome sexual behavior. A supervisor who fires an employee because that employee will not go on a date with him or her has engaged in quid pro quo harassment. The same is true of a promotion conditioned on a sexual relationship, or a schedule change imposed as punishment for saying no.
Hostile Work Environment
A hostile work environment is a workplace permeated by unwelcome sexual behavior, or by behavior directed at an employee because of that employee’s sex. The conduct must be offensive, hostile, and/or intimidating, and must adversely affect the employee’s ability to do the job. Pervasive unwelcome sexual comments or jokes that continue after an employee has made clear he or she is uncomfortable are a common example. Under California law, a single incident can be enough if it is sufficiently severe, and the law does not require an employee to prove the conduct hurt job performance in a measurable way.
If You Signed an Arbitration Agreement
Signing one does not mean your options are closed. If your case involves sexual harassment or sexual assault, federal law may give you the right to have a jury decide it — along with everything else you are claiming.
If you have questions, The Rutten Law Firm is here to help. We offer free consultations. Pay nothing until you win.