Arbitration United States

California Court of Appeal Bars Mandatory Arbitration in Sexual Orientation Harassment Case

By ADR Journal Editorial Desk Published 1 source Arbitration Employment Disputes Federal Arbitration Act Sexual Harassment United States United States

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TL;DR

  • California Court of Appeal ruled that sexual orientation harassment claims are covered by the EFAA exemption.
  • Such claims cannot be compelled to mandatory arbitration under pre-dispute agreements.
  • The court applied logic from the U.S. Supreme Court's Bostock decision to California's FEHA.
  • The ruling narrows the disputes subject to mandatory arbitration in California workplaces.

Overview

On July 27, 2026, the California Court of Appeal ruled in Decloedt v. Radnet Management, Inc. that claims involving harassment based on sexual orientation constitute 'sexual harassment' under the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), thus barring employers from requiring such claims to be arbitrated through pre-dispute agreements.

What Happened

Radnet Management sought to compel arbitration of former employee Trevor Decloedt's sexual orientation harassment claim, arguing that such claims were not covered by California's Fair Employment & Housing Act (FEHA) as 'sexual harassment.'

The appellate court disagreed, relying on the U.S. Supreme Court's Bostock v. Clayton County decision, which treats discrimination based on sexual orientation as discrimination 'because of sex.'

The court concluded that under FEHA, harassment based on an employee's sexual orientation falls within the scope of harassment 'because of sex,' and thus the EFAA exemption applies.

The court also found that Decloedt had adequately alleged conduct that, if proven, would be sufficiently severe or pervasive to constitute actionable workplace harassment under the EFAA.

Context

The EFAA is a statutory exemption to the Federal Arbitration Act, rendering unenforceable pre-dispute agreements that compel arbitration of sexual harassment claims.

The Bostock v. Clayton County (2020) precedent clarified the scope of federal employment anti-discrimination protections to include sexual orientation.

Why It Matters

  • This decision clarifies that under California law and the EFAA, claims of workplace harassment based on sexual orientation cannot be subject to mandatory arbitration agreements.
  • The ruling may influence how California employers structure their dispute resolution provisions and could shape future litigation concerning the scope of arbitral exemption under EFAA.

Sources

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