The EFAA’s Expanding Reach: Courts Void Arbitration Agreements for Entire Lawsuits When Sexual Harassment or Assault Claims Are Pleaded

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Overview

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“EFAA”), enacted March 3, 2022, added Chapter 4 to Title 9 of the United States Code.[1] The statute provides that, at the election of the person alleging qualifying conduct, “no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.”[2] The EFAA also vests courts—not arbitrators—with authority to determine whether Chapter 4 applies.[3]

Nearly four years after enactment, the EFAA is no longer a new statutory carveout whose practical effect is merely anticipated. A body of case law has now developed around its operative language, and courts increasingly treat the statute as a case-dispositive limit on mandatory arbitration programs: where any claim in a lawsuit plausibly qualifies under the EFAA, the entire case—including non-EFAA employment claims—may proceed in court rather than arbitration.

The Emerging Issue

The central interpretive question has become what “with respect to a case” means in Section 402(a). Courts confronting mixed complaints—containing both EFAA-qualifying claims (e.g., sexual harassment) and non-qualifying claims (e.g., wage-and-hour violations, race discrimination, retaliation, wrongful termination, or emotional distress)—have increasingly held that the statute’s use of the word “case” invalidates the arbitration agreement as to the entire action, not merely the qualifying claim. Courts have also enforced Section 402(b)’s forum-allocation rule: questions about the EFAA’s applicability and the enforceability of covered arbitration agreements are for courts, not arbitrators, even where an agreement contains a delegation clause. The emerging practical rule is therefore claim-sensitive at the threshold but case-wide in effect: if the complaint plausibly alleges a sexual harassment or sexual assault dispute arising within the statute’s temporal and substantive scope, arbitration may be unavailable for all claims in the lawsuit.

Key Case Law

Bruce v. Adams & Reese, LLP (6th Cir. 2026). In an issue of first impression at the federal appellate level, the Sixth Circuit held that because the plaintiff plausibly stated a sexual harassment claim, the EFAA barred arbitration of her entire case. The court emphasized that Congress used “case,” not “claim,” and concluded that the statute operates at the lawsuit level once a qualifying sexual harassment dispute is plausibly alleged. Bruce is now a leading appellate decision for the broad interpretation and is likely to shape motion practice in federal courts confronting mixed EFAA and non-EFAA complaints.[4]

Liu v. Miniso Depot CA, Inc. (Cal. Ct. App. 2024). The California Court of Appeal similarly held that when a plaintiff’s lawsuit contains at least one EFAA-qualifying claim, the arbitration agreement is unenforceable as to all claims asserted in the action—including wage-and-hour, discrimination, retaliation, constructive discharge, and emotional distress theories. Liu is particularly important for employers because it applies the entire-case rule in a mixed employment complaint involving claims that, standing alone, would ordinarily be subject to arbitration.[5]

District and State Court Authority. Numerous courts have reached the same result. Delo v. Paul Taylor Dance Foundation, Inc., 685 F.Supp.3d 173 (S.D.N.Y. 2023) remains an early and widely cited decision holding that, where a dispute presents both sexual-harassment and non-harassment claims, the EFAA blocks arbitration of the entire case. Later decisions from other jurisdictions reflect the same trend. Recent Delaware Chancery analysis in Birch Strategic Capital, LLC v. Global Nourish, LLC collected these authorities and described the growing consensus that EFAA operates at the level of the “case which is filed,” while still requiring a relationship between the case and a qualifying sexual harassment or sexual assault dispute.[6]

Unsettled Areas. The broad interpretation is now the majority position with meaningful appellate support, but several issues remain unsettled outside jurisdictions with controlling authority. Courts continue to assess how plausible and specific the sexual harassment or sexual assault allegations must be, whether artful pleading can be disregarded, whether the alleged dispute arose on or after March 3, 2022, and how closely the non-EFAA claims must relate to the qualifying dispute. Employers also continue to test whether severability, bifurcation, stay, or claim-by-claim arbitration provisions can preserve arbitration for non-EFAA claims, although courts applying the entire-case rule have been reluctant to let contract drafting override the statutory term “case.”[7]

Practical Implications for Employers

The EFAA remains highly topical because plaintiffs, employers, and courts are now litigating its consequences in real cases, not merely forecasting its effect. For employers relying on broad mandatory arbitration programs, the current case law creates several practical risks:

• Jury Trial Exposure. Claims employers expected to arbitrate—wage-and-hour, discrimination, retaliation—may proceed before a jury if the complaint includes a single EFAA-qualifying allegation.
• Class/Collective Action Risk. Because the EFAA also addresses predispute joint-action waivers, employers may face renewed class, collective, or coordinated-action exposure when EFAA allegations are asserted.
• Strategic Pleading and Motion Practice. Plaintiffs’ counsel may be incentivized to plead sexual harassment or assault allegations to keep an entire dispute in court, while employers are increasingly focused on early Rule 12 challenges and targeted motions to compel arbitration where the EFAA allegations are implausible, untimely, or insufficiently related to the broader case.
• Increased Costs and Public Exposure. Court proceedings entail expanded discovery, greater motion practice, longer timelines, higher defense costs, and a public record that may attract media attention.

Recommended Action Steps

1. Review Arbitration Agreements. Audit existing agreements to ensure they do not purport to require arbitration of sexual harassment or assault disputes and that any delegation clause expressly recognizes that courts decide EFAA applicability and enforceability. Remove language suggesting that EFAA disputes must be arbitrated at the employee’s expense or without the employee’s election.
2. Add Severability/Bifurcation Provisions. Consider clauses that sever EFAA-qualifying claims and authorize courts to compel arbitration of remaining claims or stay court proceedings pending arbitration where permitted. Employers should understand, however, that these provisions preserve arguments rather than guarantee partial arbitration; courts adopting the “entire case” rule may still hold the agreement unenforceable as to all claims in the filed action.
3. Challenge Implausible EFAA Claims Early. Move to dismiss meritless or artfully pleaded EFAA claims under Rule 12(b)(6) before or concurrently with motions to compel arbitration.
4. Assess Jurisdictional Posture. In the Sixth Circuit and California, employers should assume the entire-case rule will be difficult to avoid when the EFAA is properly invoked. Elsewhere, evaluate whether partial arbitration remains viable, but account for the growing body of district and state authority adopting the same interpretation.
5. Update Budgets and Settlement Strategy. For matters involving EFAA allegations, budget for full litigation and reassess settlement postures.
6. Train Stakeholders. Ensure HR, legal, and employee-relations teams can identify EFAA-triggering allegations early, preserve relevant evidence, and coordinate arbitration strategy with the merits defense, settlement posture, and public-litigation risk.

Conclusion

The EFAA has matured from a statutory exception to mandatory arbitration into a recurring litigation tool with potentially case-wide consequences. The judicial trend is clear: where a complaint includes even one plausible sexual harassment or assault claim covered by the EFAA, employers should expect plaintiffs to argue—and many courts to hold—that arbitration agreements and joint-action waivers are unenforceable as to the entire lawsuit. The Sixth Circuit’s decision in Bruce and the California Court of Appeal’s decision in Liu provide appellate authority likely to influence courts nationwide, while district and state court decisions continue to fill in the statute’s practical boundaries. Employers who rely on arbitration should reassess that reliance and consult experienced employment counsel to review their programs, revise agreements, and develop litigation strategies that account for the EFAA’s expanding and increasingly case-law-driven scope.

This alert is for informational purposes only and does not constitute legal advice. Please contact your employment counsel to discuss how these developments may affect your organization.

[1]Pub. L. 117-90, 136 Stat. 26 (2022) (codified at 9 U.S.C. §§ 401–402).

[2]9 U.S.C. § 402(a).

[3]9 U.S.C. § 402(b).

[4]Bruce v. Adams & Reese, LLP, 168 F. 4th 367 (6th Cir. 2026).

[5]Liu v. Miniso Depot CA, Inc., 105 Cal. App. 5th 791 (2024).

[6] Birch Strategic Cap., LLC v. Glob. Nourish, LLC, No. 2025-0660-MTZ, 2026 WL 1046888, at *1 (Del. Ch. Apr. 17, 2026)

[7]9 U.S.C. § 401(3)–(4).