Courts limit arbitration to block dismissal of sexual harassment suits
California appellate court rules arbitration clauses can't dismiss entire sexual harassment lawsuits.
Why it matters: These decisions restrict companies' ability to use arbitration clauses to avoid sexual harassment lawsuits, forcing broader litigation and changing employment law strategies for legal teams and HR professionals.
- July 7, 2026: California Court of Appeal in Decloedt v. Radnet Management ruled that a single plausible sexual harassment claim blocks arbitration for all claims in the lawsuit.
- The 2022 Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA) invalidates arbitration agreements for sexual assault and harassment claims.
- Sixth Circuit (Bruce v. Adams & Reese, LLP, March 2026) and New Jersey Appellate Division (McDermott v. Guaranteed Rate, Dec. 26, 2025) said EFAA applies to entire lawsuits, not only harassment claims.
- Courts say if a sexual harassment claim is plausibly alleged, all related claims must be decided in court, including discrimination or retaliation.
On July 7, 2026, the California Court of Appeal issued the decision in Decloedt v. Radnet Management. The court held that when a sexual harassment claim is plausibly alleged, the entire lawsuit—including unrelated claims such as discrimination or retaliation—cannot be forced into arbitration. This narrows the enforceability of arbitration agreements in employment cases.
This ruling follows the 2022 Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA), which allows plaintiffs alleging sexual harassment or assault to bring their claims in court instead of arbitration.
The U.S. Sixth Circuit reinforced this interpretation in Bruce v. Adams & Reese, LLP (March 2026), ruling that the EFAA bars arbitration of the entire lawsuit if any sexual harassment claim is plausibly supported. Similarly, the New Jersey Appellate Division ruled in McDermott v. Guaranteed Rate, Inc. (Dec. 26, 2025) that an adequately pleaded sexual harassment claim removes arbitration as an option for the entire case.
The Colorado Court of Appeals in Dreifus v. Glenarm Dining Services, Inc. also affirmed that the EFAA covers the entire case if claims relate to sexual harassment allegations.
In practical terms, these rulings mean companies cannot rely on arbitration clauses to block entire lawsuits when a sexual harassment claim stands. Legal teams and HR must reassess risk and litigation strategies, as claims of discrimination or retaliation tied to harassment allegations will proceed in court along with the harassment claims.
By the numbers:
- July 7, 2026 — California appellate ruling in Decloedt v. Radnet Management
- March 2026 — Sixth Circuit decision in Bruce v. Adams & Reese, LLP
- December 26, 2025 — New Jersey Appellate Division ruling in McDermott v. Guaranteed Rate, Inc.
Yes, but: While these rulings limit arbitration, courts still require the sexual harassment claims to be plausibly alleged; frivolous or unsupported claims may not block arbitration of other claims.
What's next: Additional appellate courts are expected to weigh in on the scope of the EFAA in 2026, potentially leading to Supreme Court review for definitive guidance.