In a consolidated appeal, the New Jersey Appellate Division held that when a lawsuit includes an adequately pled claim of sexual harassment or sexual assault, the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA) renders the parties' arbitration agreement unenforceable as to the entire case, not merely the harassment claim. The decision has immediate consequences for every workplace dispute in New Jersey governed by a mandatory arbitration agreement.
Background
Congress enacted the EFAA in March 2022, giving plaintiffs asserting sexual assault or sexual harassment claims the right to invalidate pre-dispute arbitration agreements. What remained unsettled in New Jersey was the statute's reach: does it free only the harassment claim from arbitration, or the plaintiff's entire lawsuit?
The plaintiff sued her former employer asserting NJLAD sexual harassment claims alongside wage payment, breach of contract, misappropriation of likeness, and tortious interference claims. The employer moved to compel arbitration of all claims under the parties' agreement, and the trial court sent the non-harassment claims to arbitration.
The Decision
The Appellate Division reversed. Examining the EFAA's text, the court emphasized that Congress used the broad word “case” in the provision allowing a plaintiff to invalidate arbitration agreements, in contrast to the narrower word “claim” used elsewhere in the statute. That choice signals congressional intent to exempt the entire lawsuit from arbitration once it contains a viable sexual harassment or assault claim. The court added that in employment litigation, seemingly unrelated claims are often materially informed by the same employment relationship, making claim-splitting between forums impractical.
What It Means for New Jersey Cases
The strategic consequence is significant for both sides. A single adequately pled harassment count now operates as a key that keeps every claim in the complaint in court, including wage, contract, and commercial claims that would otherwise proceed in arbitration. Employees gain a unified forum and a jury; employers lose the ability to compartmentalize disputes. Severability clauses and carefully drafted carve-outs will not change the result; under the court's reading of the statute, once the case contains a viable harassment claim, the entire case stays in court.
How We Put It to Work
The critical word in the holding is “adequately.” The EFAA is triggered only by a plausibly pled sexual harassment or assault claim, so the sufficiency of that count is now the front line of any arbitration dispute: it must be tested, by motion or in the arbitration briefing itself, before the forum question is decided, and it must be pleaded with care by any party invoking the statute. Timing also matters: the EFAA applies only to claims that accrued or disputes that arose on or after March 3, 2022, and accrual dates deserve scrutiny in every case. Finally, McDermott makes the connection between workplace compliance and forum selection direct and unavoidable, and we counsel our clients on both sides of that equation: arbitration programs and harassment-prevention infrastructure now stand or fall together.
This article is provided for general informational purposes only and does not constitute legal advice. Reading it does not create an attorney-client relationship with Sanchez Maselli Trial Attorneys.