Worker-Friendly Circuit Rulings Grow With #MeToo Arbitration Law

More federal appeals courts are boosting worker efforts to bypass private arbitration of sexual harassment cases, even if the allegations occurred before a unique federal law went into effect.

A split US Court of Appeals for the Sixth Circuit last week became the fourth appellate panel to side with employees on an issue over the reach of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, a 2022 law viewed as a significant win for the #MeToo social justice movement.

Workers who allege harassment before the statute’s March 3, 2022, effective date can still avoid arbitration if they file a sexual harassment charge with a federal agency or a lawsuit in court after that date, the Sixth Circuit majority said.

This finding mirrors recent decisions in the Eighth, Third, and Second circuits. The worker-friendly rulings will eventually phase out going forward as statutes of limitation deadlines come into play. But for now, they’re binding in district courts in 13 states.

“Courts are defining the terms of the Act in an employee-friendly way to keep sexual harassment and assault claims out of arbitration,” said Lauren Teukolsky, founder of plaintiff-side firm Teukolsky Law PC. “It’s a very specific inquiry, so the trial courts are really going to have to look at the history of not only when the sexual harassment or assault occurred, but also when did the parties become oppositional or adversarial.”

The Sixth Circuit ruling may seem “surprising” to employers because the mortgage underwriter who brought the case had quit her job at United Wholesale Mortgage LLC and alleged discrimination and sexual misconduct claims that occurred before the law’s effective date, said Laura Salerno Owens, a shareholder at Markowitz Herbold PC.

However, the worker later filed a charge with the Equal Employment Opportunity Commission and sued after the federal arbitration carveout became law.

“They might think intuitively that if somebody quit their job before a law went into effect, that law wouldn’t apply to what happens while you’re working there,” said Owens, who has represented both workers and employers in workplace litigation.

Claim v. Dispute

The EFAA was a rare amendment to the Federal Arbitration Act, which generally favors the enforcement of valid arbitration agreements.

Mandatory arbitration pacts increasingly have been used by companies to keep cases—and potential class actions—out of court. Supporters say private dispute resolution is more time and cost efficient than litigation.

But worker advocates viewed the contracts as a way of denying sexual harassment and assault victims their day in court.

The EFAA applies to “any dispute or claim that arises or accrues on or after the date” of its enactment. When it was a bill moving through Congress, lawmakers would sometimes use the terms “claim” and “dispute” interchangeably.

The Sixth Circuit majority concluded that a claim accrues “when a plaintiff has a complete and present cause of action"—the right to file suit and obtain relief. A dispute usually denotes a controversy between parties and arises after a claim accrues, it said.

But Judge Amul Thapar’s dissenting opinion accused the majority of giving an “independent meaning” to the terms.

“In all cases, the dispute predates the formal legal demand—whether that may be the filing of a lawsuit, an administrative charge, a demand letter, a request for arbitration, or ‘some other event,’” he wrote. “Given the ordinary meaning of the term ‘dispute,’ the formal charge or suit to which it gives rise can’t possibly mark its emergence. The dispute must pre-exist the lawsuit, just as a claim must.”

Thapar penned the first circuit court dissent on the arise and accrue issue, which could “inspire other federal circuits if they get a chance to look at this question,” said Jonathan Crotty, a partner at management-side firm Parker Poe Adams & Bernstein LLP.

“When Congress passes a law that’s not very precisely drafted in terms of whether it impacts existing claims or not, and there’s very little legislative history that indicates intent, it just creates these problems in litigation,” he said.

Issue Will Dissolve

The arise and accrue issue, however, will gradually become less prominent in the courts in the years to come, attorneys said. That’s because more claims of misconduct will have occurred after March 3, 2022, as time marches on, they said.

California, for instance, has a three-year statute of limitations for sexual harassment claims under its anti-harassment law, one of the longest in the country.

A plaintiff there cannot rely on conduct before March 2022 unless they can show that a “continuing violation had occurred” before the EFAA’s effective date, “all the way forward until today,” Teukolsky said.

The circuit rulings are likely “limited” due to the “unique window of time” needed to avoid arbitration, Owens said.

The case is Memmer v. United Wholesale Mortgage LLC, 6th Cir., No. 24-01144, opinion issued 4/18/25.