In a potentially precedent-setting decision that could dramatically limit employers’ enforcement of employee arbitration agreements, a New York federal judge has broadly interpreted the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (see our prior alert on the law here, signed into law in March 2022) to mean that when an employee alleges multiple claims against an employer, ONE of which is covered by the Act, the ENTIRE case must proceed in court and cannot be arbitrated.
In Johnson v. Everyrealm, Inc. et. al, (S.D.N.Y. Feb 24, 2023), the Court held that the new federal law applies to ALL of former employee’s claims because it makes arbitration agreements unenforceable “with respect to a case,” not just individual sexual harassment claims in the case.
This answers what had been an open question with the federal law when it passed last spring. It will be interesting to see if this ruling holds on an inevitable appeal to the Second Circuit, and how other jurisdictions interpret the breadth of the new law.