Arbitration Agreement Not Enforced in Harassment, Disability Case

Takeaway: The 6th Circuit is the first federal appeals court to rule that a plaintiff’s entire case is barred from arbitration if it includes a viable sexual harassment claim. Cases pending in other federal circuits raise the same issue, so eventual U.S. Supreme Court review may ensue. In the meantime, strong anti-harassment policies, effective training, reliable reporting mechanisms, and prompt and thorough investigations are key to staying out of court. 

When an employee plausibly alleges a sexual harassment claim — plus other claims — in a single lawsuit against an employer with whom the employee has an otherwise-valid arbitration agreement, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA) makes the arbitration agreement unenforceable with respect to all the claims comprising the case, according to the 6th U.S. Circuit Court of Appeals.

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The Federal Arbitration Act (FAA) provides that any agreement to arbitrate “shall be valid, irrevocable, and enforceable,” save for legal grounds for the revocation of any contract, or as provided in the EFAA. The EFAA defines “sexual harassment dispute” as “a dispute relating to conduct that is alleged to constitute sexual harassment under applicable federal, tribal, or state law.” At the alleging party’s choice, a predispute arbitration agreement is not valid or enforceable as to such a case.

A paralegal sued the law firm where she was employed claiming that an attorney who had worked with and supervised her there repeatedly made sexual comments and jokes to and about her, and made inappropriate comments about her appearance, clothing, and private life. 

The paralegal — who had a history of childhood abuse, and was diagnosed with post-traumatic stress disorder, attention deficit hyperactivity disorder, social phobia, and various other medical conditions — also made claims under the Americans with Disabilities Act (ADA). Specifically, she alleged that the law firm’s failure to accommodate or to engage in an interactive process regarding her need to take sedatives to sleep made it difficult for her to wake up or arrive at the office on time. 

Although she had previously been allowed a flexible schedule, the law firm eventually placed her on a fixed schedule. When she continued to be tardy, the paralegal’s supervisors warned she could be terminated if she arrived late again. After reporting to HR and working with her physician to get different medication, the paralegal was late a few more times. Ultimately, she was terminated and then sued.

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In ruling on the law firm’s motions to dismiss the claims and to compel arbitration, the trial court found that the paralegal had adequately stated a claim for sexual harassment and that the EFAA precluded arbitration of not only her sexual harassment claim but also her ADA claims. On appeal, the 6th Circuit agreed.

At the pleading stage, the question is simply whether the paralegal’s complaint alleged sufficient facts from which “a court, informed by its judicial experience and common sense could draw the reasonable inference that [the paralegal] was subjected to a hostile work environment” based on sex, the court said. A hostile work environment exists “when the workplace is permeated with ‘discriminatory intimidation, ridicule, and insult,’ that is ‘sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment,’ ” the 6th Circuit noted. 

The conduct must be so severe or pervasive as to constitute a hostile or abusive working environment both to the reasonable person and the actual victim. A plaintiff may meet her burden of showing that such conduct was pervasive by asserting that it was ongoing, commonplace, and continuing. She need not recount each and every specific instance of such comments, the appeals court explained. 

Viewed in the light most favorable to the paralegal, and drawing all inferences in her favor, the facts demonstrating a pattern of humiliating sexualized comments by a supervisor plausibly alleged conduct “sufficiently severe or pervasive to alter the conditions of [her] employment and create an abusive work environment,” the 6th Circuit decided.

With regard to the paralegal’s ADA claims, the 6th Circuit ruled that predispute arbitration agreements are unenforceable with respect to the entire case relating to a sexual harassment dispute. “The operative word is ‘case’,” as encompassing a plaintiff’s entire suit, the court said. In light of legal and standard dictionary definitions, that “usage stands in contrast to the term ‘claim,’ which denotes a singular … demand for money, property or legal remedy.”

Bruce v. Adams and Reese LLP, CA6, No. 25-5210 (Feb. 25, 2026), petition for en banc rehearing denied (April 9, 2026).

Margaret M. Clark, J.D., SHRM-SCP, is a freelance writer in Arlington, Va.