Employee’s Claims of Sexual Harassment and Assault Not Subject to Mandatory Arbitration

Takeaway: An employee who signed an arbitration agreement with his employer without disclosing that he was being subjected to sexual harassment and assault did not have to arbitrate legal claims arising out of the alleged harassment and assault due to the 2022 enactment of the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act.

An employee who signed an arbitration agreement with his employer in the regular course of his employment, without disclosing that he was allegedly being subjected to sexual harassment and assault, did not have to arbitrate legal claims arising out of the alleged harassment and assault, a California appeals court ruled. The enactment in 2022 of the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act invalidated the predispute arbitration agreement in this case, the court said.  

The employee worked as the chief operating officer at a community clinic that provides care to low-income and medically uninsured patients. In May 2018, the employee signed his first arbitration agreement.

The employee alleged that in July 2018, he was subjected to sexual harassment by the clinic’s chief medical officer and that he was sexually assaulted by him on Nov. 18, 2018, and April 17, 2019. The chief medical officer threatened to fire the employee if he revealed the incidents to anyone. The employee kept the incidents to himself out of shame and fear of losing his job.

On June 25, 2019, the employee signed a new arbitration agreement agreeing to arbitrate “employment disputes” with the clinic. Eight subsequent incidents of sexual harassment and sexual assault allegedly took place between September 2019 and Feb. 28, 2022.

The federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act became effective on March 3, 2022.  

In May 2022, the employee filed a complaint with the California Department of Fair Employment and Housing (DFEH) and requested an immediate right-to-sue notice. DFEH closed the complaint and issued a right-to-sue notice on May 27, 2022.

That same day, the employee filed a complaint against the clinic, alleging causes of action for sexual harassment and sexual battery. The clinic filed a motion to compel arbitration, arguing that the act did not apply because the employee’s claims accrued prior to the effective date of the act and that the arbitration agreement was signed after the sexual harassment or sexual assault took place.

The trial court denied the motion, and the clinic sought review in the appeals court. The appellate court affirmed the trial court’s refusal to order arbitration of the claims.

Definition of ‘Dispute’

The federal law provides that, at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, no predispute arbitration agreement is valid with respect to a federal or state case relating to that dispute.

The act defines “predispute arbitration agreement” as “any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement.”

The clinic claimed that the arbitration agreement in this case was not a “predispute” arbitration agreement because the conduct allegedly began before the employee signed the arbitration agreement. The appeals court disagreed with the clinic’s interpretation of the term “dispute.”

The act does not define a “dispute” or state when a dispute has “arisen,” the court noted. Therefore, it said, it would look to general and legal dictionaries for the term’s ordinary meaning. The Cambridge Dictionary defines a dispute as “an argument or disagreement, especially an official one.” Black’s Law Dictionary defines a dispute as a “conflict or controversy, especially one that has given rise to a particular lawsuit.”

The court then concluded that the date that a dispute has arisen for purposes of the act is a fact-specific inquiry in each case, but a dispute does not arise solely from the alleged sexual conduct. A dispute arises when one party asserts a right, claim or demand, and the other side expresses disagreement or takes an adversarial posture. In other words, a dispute cannot arise until both sides have expressed their disagreement, either through words or actions. Until there is a conflict or disagreement, there is nothing to resolve in litigation.

There is no evidence of a disagreement or controversy in this case until after the date of the arbitration agreement and the effective date of the act, when the employee filed charges with the DFEH in May 2022, the court said. 

The clinic also claimed that the act did not apply because the claims accrued before the effective date of the act. The court disagreed with this as well. The federal law, the court said, unambiguously states that it applies in any case that relates to the sexual assault dispute or sexual harassment dispute. The act clearly applies in this case, which was filed after the effective date of the act, the court concluded.

Kader v. Southern California Medical Center Inc., Calif. Ct. App., No. B326830 (Jan. 29, 2024).

Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md.