BlogLine

Sixth Circuit expands reach of EFAA: Sexual harassment claim may keep entire case in court

3/26/26

By: Madison Alvarez

The Sixth Circuit recently issued a decision with significant implications for employers relying on arbitration agreements. In Bruce v. Adams & Reese LLP, the court held that when a lawsuit includes a sexual harassment allegation covered by the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA), the entire case may proceed in court rather than arbitration. This result applies even where the remaining claims would otherwise fall within a valid and enforceable arbitration agreement. For employers, the decision materially expands the risk that disputes will be litigated in a public forum.

The ruling turns on the court’s interpretation of the term “case” in the EFAA. Many employers anticipated that the statute would apply only to the specific sexual harassment claim at issue. The Sixth Circuit rejected that narrower view and instead held that the presence of a qualifying claim removes the entire action from arbitration. In practical terms, a single covered allegation can alter the procedural posture of all claims asserted in the same lawsuit.

Notably, the Sixth Circuit is the first federal appellate court to address this issue. Other circuits may adopt a similar approach or reach a narrower interpretation. A split among the circuits would likely prompt review by the United States Supreme Court.

Why this decision matters for employers

The decision reflects a developing trend that employers with arbitration programs should monitor closely. While arbitration agreements remain an important risk management tool, the EFAA now introduces a meaningful limitation on their enforceability in cases involving sexual harassment allegations.

Expanded procedural impact

Under the Sixth Circuit’s interpretation, the EFAA may have broader procedural consequences than many employers expected. Any lawsuit that includes a qualifying sexual harassment allegation may proceed entirely in court, even where other claims, such as discrimination, retaliation, or wage-related claims, would otherwise be subject to arbitration. This increases the likelihood of public litigation, broader discovery and higher defense costs.

Strategic pleading considerations

The decision also creates an incentive for plaintiffs to include sexual harassment allegations where the facts arguably support such a claim. By doing so, a plaintiff may avoid arbitration for all claims in the case. Employers may therefore see more complaints combining harassment allegations with other employment-related claims in a single action.

Reevaluation of arbitration and response strategies

In light of this development, employers should consider:

• Reviewing arbitration agreements to ensure clarity, enforceability, and alignment with current law;
• Evaluating internal reporting and investigation protocols for harassment allegations, given their expanded procedural significance;
• Training supervisors and HR personnel to respond promptly and appropriately to complaints that may implicate the EFAA; and
• Preparing for an increase in court-based litigation, including the associated costs and exposure.

Employers should also consult with employment counsel to assess whether updates to dispute resolution programs or broader risk management strategies are warranted.

What to expect next

The Sixth Circuit’s decision represents a meaningful shift in how the EFAA may be applied. As other courts confront similar issues, further guidance, and potentially divergent interpretations, are likely to emerge. Employers should continue to monitor developments and reassess their arbitration strategies in light of this evolving landscape.

Freeman Mathis & Gary will continue to track these developments and advise employers on practical steps to mitigate risk. Our attorneys regularly assist clients with arbitration program design, policy updates and litigation strategy to ensure compliance while preserving flexibility in dispute resolution.

For more information on this topic contact Madison Alvarez at madison.alvarez@fmglaw.com or your local FMG attorney.

Information conveyed herein should not be construed as legal advice or represent any specific or binding policy or procedure of any organization. Information provided is for educational purposes only. These materials are written in a general format and not intended to be advice applicable to any specific circumstance. Legal opinions may vary when based on subtle factual distinctions. All rights reserved. No part of this presentation may be reproduced, published or posted without the written permission of Freeman Mathis & Gary, LLP.