The federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA) of 2022 allows a plaintiff alleging sexual harassment to opt out of an enforceable arbitration agreement. In some California cases, the plaintiffs’ bar has included sexual harassment claims alongside other workplace claims in an effort to invoke the EFAA and avoid arbitration.
The strategy has worked at times, but courts have begun to draw limits. The Northern District of California recently articulated a limiting principle: simply labeling a set of facts as “sexual harassment” is insufficient to invoke the EFAA (decision here). Rather, the court held that a plaintiff must plausibly allege conduct that actually constitutes sexual harassment under governing law before the EFAA applies.
What Happened
The plaintiff, a former product manager, alleged that a male colleague subjected her to a pattern of gender-based misconduct in the workplace. She claimed he routinely used slang terms for sexual threesomes when referring to coworkers and publicly belittled her in workplace communications. Three comments formed the centerpiece of her harassment allegations: (1) when she asked the colleague for a work document, he responded, “Let me put on my pants first”; (2) he sometimes referred to her as the “boss’s wife”; and (3) he called her the “landlady who collects rent.” After the plaintiff filed an internal complaint, human resources investigated and confirmed the misconduct had occurred. HR then convened a meeting with the plaintiff, her team, and the male colleague to address workplace behavior. The plaintiff alleged that the company retaliated against her after the meeting by modifying her responsibilities, removing her from meetings and projects, withdrawing her budget authority, and ultimately terminating her employment.
The Court’s Analysis
The plaintiff’s complaint focused mainly on alleged violations of the California Equal Pay Act, overtime compensation law, whistleblower retaliation, and age discrimination. But it included a sexual harassment claim based on the comments above. She argued that the presence of the sexual harassment allegations was enough to exempt the case from arbitration under the EFAA. The court disagreed.
Following Van De Hey v. EPAM Sys., Inc., 2025 WL 829604 (N.D. Cal. Feb. 28, 2025), the court applied the plausibility standard of Federal Rule of Civil Procedure 12(b)(6) to determine whether the EFAA applied. While the court found the allegations “troubling,” it concluded that they did not state a claim for sexual harassment under California’s Fair Employment and Housing Act (FEHA). Under the FEHA, a viable harassment claim requires conduct sufficiently severe or pervasive to alter the workplace environment.
On severity, the court drew a careful distinction between the three comments at issue and the kind of unambiguous, overtly discriminatory language that California courts have found capable of sustaining a harassment claim standing alone. The remarks—“Let me put on my pants first,” “boss’s wife,” and “landlady who collects rent”—were not, without further context or explanation, indicative of sexual harassment. Notably absent from the complaint were allegations of unwelcome sexual advances, physical conduct of a sexual nature, or visual harassment—the hallmarks of a cognizable sexual harassment claim, according to the court. What remained were largely conclusory characterizations of the colleague’s behavior, unsupported by the kind of specific factual allegations necessary to clear the plausibility bar.
On pervasiveness, the complaint was equally deficient. Despite the plaintiff’s two-year employment, she identified only three discrete incidents and offered no details regarding the frequency, pattern, or broader scope of the alleged misconduct.
The court also rejected the suggestion that the employer’s personnel decisions—removing the plaintiff from projects, stripping her of budget authority, and excluding her from meetings—could fill the gaps left by the harassment allegations. Citing well-settled California authority, the court reaffirmed that such actions are, as a matter of law, ordinary exercises of management prerogative and do not constitute harassment under the FEHA, regardless of how they are characterized in the pleadings.
The court concluded that because the plaintiff failed to plausibly plead a sexual harassment claim, the EFAA did not apply. The court compelled all claims to arbitration.
Takeaways for Employers
For employers, this decision highlights that, in the appropriate case, employers may raise the factual sufficiency of an asserted sexual harassment claim at the motion-to-compel arbitration stage—before that claim is used to void an otherwise enforceable arbitration agreement. Employers may wish to scrutinize sexual harassment allegations carefully whenever arbitration is at issue and press the plausibility argument where the facts support it. We will continue to monitor developments in this area as the law evolves.