In a pivotal decision on September 30, 2026, the U.S. Court of Appeals for the Second Circuit clarified the scope of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA), significantly impacting employer litigation strategies. The court held that when an employee invokes the EFAA, a pre-dispute arbitration agreement is rendered unenforceable for the entire lawsuit, not just the sexual harassment or assault claims.
The case, Diaz-Roa v. Hermes Law, P.C., involved Silvia Diaz-Roa, who alleged that during her tenure at Hermes Law, she was subjected to sexual harassment and was unlawfully terminated to prevent her from exercising vested stock options. She filed a lawsuit encompassing claims of sexual harassment under New York law, breach of contract, and other related allegations. The defendants sought to compel arbitration based on a pre-existing agreement. However, the Second Circuit affirmed the district court’s denial of this motion, emphasizing that the EFAA allows plaintiffs to invalidate arbitration agreements for the entire case when it includes sexual harassment or assault claims. ([mayerbrown.com](https://www.mayerbrown.com/en/insights/publications/2026/10/second-circuit-holds-efaa-invalidates-arbitration-agreements-for-all-claims-in-cases-involving-sexual-harassment?utm_source=openai))
This interpretation aligns with decisions from other circuits. The Sixth Circuit, in Bruce v. Adams & Reese, LLP, and the Ninth Circuit, in Ding v. Structure Therapeutics, Inc., have similarly concluded that the EFAA invalidates arbitration agreements for all claims within a lawsuit that includes sexual harassment or assault allegations. ([law.justia.com](https://law.justia.com/cases/federal/appellate-courts/ca9/25-1532/25-1532-2026-08-19.html?utm_source=openai))
For employers, this ruling necessitates a reassessment of litigation strategies. The decision underscores the importance of reviewing and potentially revising arbitration agreements to account for the EFAA’s provisions. Employers should also be prepared for the possibility that cases involving sexual harassment or assault claims may proceed entirely in court, affecting how they approach dispute resolution and risk management.
In summary, the Second Circuit’s ruling reinforces the EFAA’s broad application, ensuring that employees alleging sexual harassment or assault can pursue their claims in court, free from the constraints of pre-dispute arbitration agreements. Employers must adapt to this legal landscape by reevaluating their arbitration policies and preparing for more litigation in public forums.