Congress enacted the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (“EFAA”) in March 2022, limiting the enforceability of pre-dispute arbitration agreements in certain sexual assault and sexual harassment cases. Under the EFAA, an employee who alleges conduct constituting sexual assault or sexual harassment may choose to pursue the case in court rather than arbitration, even if the employee previously signed an arbitration agreement.

A developing issue, however, is how closely a court may scrutinize those allegations when an employee invokes the EFAA to avoid arbitration. Courts have taken different approaches.

In the 2024 case of Dia-Roa v. Hermes Law, P.C., the Southern District of New York held that a plaintiff can avoid arbitration by pleading nonfrivolous claims relating to sexual assault or conduct alleged to constitute sexual harassment, leaving the ultimate sufficiency of those claims for the court to decide later.

The Northern District of California has taken a different approach. The recent case of Ai v. Tencent America, LLC (July 28, 2026), joins other Northern District cases such as Rincon v. Whaleco, Inc. (April 14, 2026), and Van De Hey v. EPAM Systems, Inc. (Feb. 28, 2025), in holding that an employee must allege a viable claim for sexual assault or sexual harassment to invoke the EFAA.

These courts have applied the same plausibility standard generally used to determine whether a complaint states a legally sufficient claim. Thus, the Ai court evaluated whether the employee’s allegations plausibly stated a claim for sexual harassment, even assuming the allegations are true.

To state a sexual harassment claim, an employee generally must show that the alleged conduct was based on a protected characteristic and was sufficiently severe or pervasive to create a hostile work environment. In Ai, the court concluded that the employee had not plausibly alleged sexual harassment because the allegations involved only a limited number of remarks and did not plausibly describe a sufficiently severe or pervasive hostile work environment. The court therefore granted the employer’s motion to compel arbitration. For employers, the key takeaway is that simply labeling a claim as “sexual harassment” does not necessarily prevent arbitration. When an employee who signed an arbitration agreement brings a sexual harassment claim, employers should consult counsel early to evaluate whether the EFAA applies and whether arbitration remains a possibility. Because courts remain divided on the level of scrutiny appropriate at this stage, the forum may play an important role in whether a court evaluates the plausibility of the harassment allegations before deciding a motion to compel arbitration.

Stokes Wagner will continue to monitor developments in this area and provide updates as courts continue to interpret the EFAA. If you have any questions, do not hesitate to contact a Stokes Wagner attorney.

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THIS DOCUMENT PROVIDES A GENERAL SUMMARY AND IS FOR INFORMATIONAL/EDUCATIONAL PURPOSES ONLY. IT IS NOT INTENDED TO BE COMPREHENSIVE, NOR DOES IT CONSTITUTE LEGAL ADVICE. PLEASE CONSULT WITH COUNSEL BEFORE TAKING OR REFRAINING FROM TAKING ANY ACTION.