Workforce Bulletin

Case law related to the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“EFAA”) continues to develop.  In late 2024, the Third Circuit seemed poised to bring further clarity as to which claims fall within the EFAA and, therefore, are shielded from pre-dispute arbitration agreements. On April 6, 2025, the Court provided guidance related to the timing of “disputes” as used in the statutory text, but remanded for further consideration of whether an arbitration agreement existed at all under New Jersey law. Cornelius v. CVS Pharmacy, Inc., 2025 WL 980309 (3d Cir. Apr. 2, 2025).

Cornelius was a longtime CVS employee who alleged that she experienced discrimination from her male supervisor. After Cornelius filed numerous internal complaints, CVS terminated her employment in November 2021. She brought a Charge to the EEOC, received a right-to-sue letter, and filed a lawsuit in the U.S. District Court for the District of New Jersey. CVS moved to compel arbitration pursuant to its “Arbitration Policy.” Plaintiff opposed, arguing that the EFAA rendered the arbitration agreement unenforceable as to her claims.  The District Court disagreed, ruling that the EFAA did not apply to Cornelius’s claims because “her claims did not constitute a ‘sexual harassment dispute’” within the meaning of the statute, and compelled arbitration. Id. at *2.

Here’s a question you likely have never considered: Are hackers overseas infiltrating employers’ computer systems just to sign arbitration agreements with class action waivers for random employees?

While there is no evidence that this has ever happened anywhere, and no logical reason why it would, plaintiffs’ lawyers and even some courts seem to believe this could happen. And that is at the heart of the latest battleground over arbitration agreements with class actions waivers.

Since the United States Supreme Court’s decision in Epic Systems v. Lewis, more and more ...

On July 21, 2023, a unanimous three-judge panel once again affirmed a California federal court’s ruling that the truck drivers who deliver ingredients from Domino’s Southern California Supply Chain Center to Domino’s California franchisees are exempt from the Federal Arbitration Act (“FAA”).

The Ninth Circuit has issued its long-awaited ruling in Chamber of Commerce v. Bonta, perhaps putting a nail in the coffin of the controversial California law known as AB 51, which would have made it criminal conduct to require an applicant or employee to sign an arbitration agreement.

The history of AB 51 and the case challenging it is a tortuous one, to say the least, but the issue has always remained the same: was the California legislature too clever in its attempt to circumvent the Federal Arbitration Act (“FAA”) and the Supreme Court’s landmark decision in Epic Systems?

[UPDATE: On December 7, 2022, President Biden signed the Speak Out Act (the “Act”) into law. This bipartisan legislation, passed by the U.S. Senate on September 29, 2022 and by the House of Representatives on November 16, 2022, limits the enforceability of pre–dispute nondisclosure and nondisparagement clauses relating to sexual assault and sexual harassment claims.]

On November 16, 2022, the U.S. House of Representatives passed the Speak Out Act (the “Act”), which President Biden is expected to sign into law. The bipartisan legislation, passed by the Senate on September 29, 2022, limits the enforceability of pre-dispute nondisclosure and nondisparagement clauses relating to sexual assault and sexual harassment claims.

Litigators who defend cases brought under the Fair Labor Standards Act (“FLSA”), particularly ‘collective actions” alleging wage-and-hour violations, often have been able to counter, or even sometimes support, allegations that arbitration agreements have been waived where the conduct of a party has caused prejudice to the other side. In the case of Morgan v. Sundance, Inc., a unanimous Supreme Court has now held that the determinant of waiver is solely dependent upon the nature and magnitude of the actions of the party that might be inconsistent with arbitration, without respect to alleged prejudice.

The Court has decided the latest in a series of important cases interpreting the reach of the Federal Arbitration Act (FAA), 9 U. S. C. §§ 1 et seq.

On March 31, in Badgerow v. Walters, by an 8-1 majority (opinion written by Justice Kagan, and a lone dissent by Justice Breyer), the Court reversed an order of the Fifth Circuit and held that the federal courts do not have authority to “look through” an arbitration dispute for a federal question that would establish jurisdiction to confirm or deny an arbitral award.

On March 3, 2022, President Biden, as expected, signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“Act”) into law. As we previously explained, the Act amends the Federal Arbitration Act (FAA) to make pre-dispute arbitration agreements for sexual assault and sexual harassment claims invalid and unenforceable. Parties remain free, however, to mutually agree to arbitration after a claim has been asserted. The new law delegates any disputes regarding the Act, including as to the arbitrability of claims, to the courts, and not an arbitrator, to decide.

On June 1, 2021 the Southern District of Florida granted the motion by Uber Technologies, Inc. (“Uber”) to compel arbitration, finding that the company’s drivers did not engage in sufficient interstate commerce to meet the interstate commerce exclusion in the Federal Arbitration Act (FAA).

Plaintiffs Kathleen Short and Harold White brought a class action against Uber alleging that the company’s policy of classifying its drivers as independent contractors violates the Fair Labor Standards Act and the Florida Minimum Wage Act because the company failed to pay drivers the minimum wage. Uber sought to enforce its arbitration agreement which unambiguously required plaintiffs to pursue any potential claims in an individual arbitration.

Since the Supreme Court issued its seminal 2018 decision in Epic Systems Corp. v. Lewis, acknowledging that the Federal Arbitration Act (“FAA”) permits the use of arbitration agreements with class action waivers, many employers have implemented arbitration programs for their employees. Those arbitration programs have been aimed, in no small part, at avoiding the class and collective actions that have overwhelmed employers, particularly in California.

In response, California passed AB 51, which prohibits imposing “as a condition of employment, continued employment, or the receipt of any employment-related benefit” the requirement that an individual “waive any right, forum or procedure” available under the California Fair Employment and Housing Act (“FEHA”) and Labor Code.

Confidential arbitration agreements between employers and their employees are commonplace.  Employers favor such agreements for many reasons, including preserving privacy and allowing legitimate claims to be either settled or litigated based on their merits, rather than the threat of public embarrassment or high defense costs.  Employees, too, may value the confidentiality afforded by arbitration.  In contrast to private and confidential arbitration proceedings, public testimony and publicly filed court pleadings, motions, and briefs may contain unflattering or ...

Given the ever-increasing number of wage-hour class and collective actions being filed against employers, it is no surprise that many employers have turned to arbitration agreements with class and collective action waivers as a first line of defense, particularly after the United States Supreme Court’s landmark 2018 Epic Systems v. Lewis decision.

If there is a common misconception about Epic Systems, however, it is that the Supreme Court concluded that all arbitration agreements with all employees are enforceable under all circumstances.  The Court reached no such ...

As we wrote here, United States District Court Judge Kimberly J. Mueller of the Eastern District of California wrote a brief “minute order” explaining that she was issuing a preliminary injunction to halt enforcement of California’s controversial anti-arbitration law, known as AB 51.

The new law, which was set to go into effect on January 1, 2020, would outlaw mandatory arbitration agreements with employees. AB 51 would also prohibit arbitration agreements that would require individuals to take affirmative action to be excluded from arbitration, such as opting out.  ...

The California Legislature’s attempt to circumvent both the Federal Arbitration Act (“FAA”) and the Supreme Court’s landmark decision in Epic Systems by crafting a new law prohibiting California employers from requiring employees to enter into arbitration agreements is off to a rocky start in the courts, to say the least.

As discussed below, a federal court has issued a preliminary injunction enjoining enforcement of California’s controversial new anti-arbitration statute known as AB 51.  Barring some new development, it now appears clear that the statute cannot be ...

As we recently wrote here, on December 29, 2019, just days before California’s new arbitration statute known as AB 51 was to go into effect, a federal judge in the United States District Court of the Eastern District of California granted a temporary restraining order (“TRO”) to enjoin enforcement of AB 51.

The new law, which was set to go into effect on January 1, 2020, would outlaw mandatory arbitration agreements with employees.

AB 51 would also prohibit arbitration agreements that would require individuals to take affirmative action to be excluded from arbitration, such ...

On November 26, 2019, San Francisco Superior Court Judge Richard B. Ulmer ruled that the Federal Arbitration Act (“FAA”) might not apply to Uber drivers who are engaged in interstate commerce while driving passengers to or from international airports.

In his claims before the Division of Labor Standards and Enforcement (“DLSE”), driver Sangam Patel (“Patel”) seeks recovery of unpaid wages, overtime pay, vacation pay, meal and rest break premiums, and unpaid business expenses allegedly owed by Uber. Uber petitioned to compel arbitration of Patel’s (“Patel” ...

As employers with operations in California had feared, Governor Gavin Newsom has signed AB 51, which effectively outlaws mandatory arbitration agreements with employees – a new version of a bill that prior Governor Jerry Brown had vetoed repeatedly while he was in office.

The bill not only prohibits mandatory arbitration agreements, but it also outlaws arbitration agreements in which employees must take an affirmative action to escape arbitration, such as opting out.

And as the statute is written in broad terms that extend to waivers of statutory “procedures,” it appears to ...

Many retail employers require their employees to agree to arbitrate employment-related disputes as a condition of employment. The United States Supreme Court has repeatedly emphasized that workplace arbitration agreements are enforceable according to their terms, and state law that restricts such enforcement is preempted by the Federal Arbitration Act (“FAA”). Notwithstanding those pronouncements, states, such as New York and New Jersey, have crafted legislation designed to nullify an employee’s agreement to arbitrate certain employment-related claims.

In response to the #MeToo movement, New York and New Jersey have enacted legislation banning workplace arbitration agreements covering sexual harassment and discrimination claims. On April 12, 2018, New York State, as part of its 2018-2019 budget, amended § 7515 of the New York Civil Practice Law and Rules (“CPLR”) to prohibit employers with four or more employees from incorporating mandatory, pre-dispute arbitration clauses in written employment contracts requiring the resolution of allegations of claims of sexual harassment. Additionally, any such clause in a contract entered into after the effective date of the law would be rendered null and void.

On June 19, 2019, the New York legislature passed a bill (which, as of the date of this post, has yet to be signed into law) that makes sweeping changes to New York’s harassment and discrimination laws. Among other things, the bill again amends § 7515 of the CPLR to ban mandatory pre-dispute arbitration clauses in written employment contracts requiring the resolution of allegations of claims of workplace discrimination generally, not just sexual harassment claims and renders any such clause null and void.

On March 18, 2019, New Jersey Governor Murphy signed legislation that declares unenforceable any “provision in any employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment.” N.J.S.A. 10:5-12.7(1)(a).  The law further provides that “[n]o right or remedy under the [Law Against Discrimination], or any other statute or case law shall be prospectively waived.” N.J.S.A. 10:5-12.7(1)(b). Both provisions can be construed to prohibit the waiver of a right to a jury trial as required by an arbitration agreement.

Many observers have questioned whether these laws restricting arbitration would be preempted by the FAA. A recent decision in the Southern District of New York, Mahmoud Latif v. Morgan Stanley & Co. LLC, No. 18cv11528 (DLC), 2019 U.S. Dist. LEXIS 107020 (S.D.N.Y. June 26, 2019), confirms that state laws targeting enforcement of arbitration agreements are vulnerable to attack on FAA preemption grounds.

As discussed below, in Latif, the court held that New York’s ban on the arbitration of sexual harassment claims was unenforceable as preempted by the FAA. The court also stated, in a footnote, that the as yet unsigned June 19, 2019 New York legislation would be preempted by the FAA for the same reasons. Latif suggests that employers covered by the FAA can be more confident that their agreements seeking to arbitrate employment-related claims will be enforceable.

Earlier this year, in New Prime, Inc. v. Oliveira, 586 U.S. __, 139 S. Ct 532 (2019), the United States Supreme Court held that the Federal Arbitration Act (“FAA”) does not apply to arbitration agreements with independent contractors who are engaged in interstate commerce.  The Supreme Court did not address whether such agreements could be enforced through other laws.

Now, two different panels of the New Jersey Appellate Division have rendered decisions addressing this unresolved issue.  Those panels, however, reached different conclusions regarding whether the arbitration ...

Our colleague Stuart M. Gerson at Epstein Becker Green recently posted an article on LinkedIn that will be of interest to our readers: “SCOTUS Today: Class Action Ambiguity Finds No Shelter Under the Federal Arbitration Act.”

Following is an excerpt:

In a 5-4 opinion (divided on expected conservative/liberal lines), authored by the Chief Justice, the Supreme Court has ruled in the case of Lamps Plus, Inc. v. Varella, No. 17-988, that under the Federal Arbitration Act (“FAA”), an ambiguous agreement cannot provide the necessary contractual basis for concluding that ...

Three months ago, the United States Supreme Court issued its decision in Epic Systems Corp. v. Lewis, holding that the National Labor Relations Act (“NLRA”) does not prevent the use of arbitration agreements with class and collective action waivers covered by the Federal Arbitration Act (“FAA”). (See our discussion of Epic here.) The Court of Appeals for the Sixth Circuit has now similarly concluded in Gaffers v. Kelly Services, Inc., that the Fair Labor Standards Act (“FLSA”) does not bar such arbitration arrangements. While this is not a surprising outcome in light ...

Featured on Employment Law This Week:  NJ Senate Advances Ban on Sex Harassment Confidentiality Agreements.

The New Jersey Senate wants no more secrecy around harassment claims. On a 34-to-1 vote, the chamber approved legislation banning confidentiality agreements involving sexual harassment claims. The bill is still pending in the House, where a vote is expected in the next few weeks. The legislation would also allow victims to keep their identities confidential and would establish jurisdiction in Superior Court, arguably bypassing arbitration agreements.

Watch the segment ...

By Marisa S. Ratinoff and Amy B. Messigian

One of the main battlegrounds between employers and employees relates to the ability of employers to preclude class actions by way of arbitration agreements containing class action waivers. In California, the seminal case of Gentry v. Superior Court (“Gentry”) has had the practical effect of invalidating class action waivers in employment arbitration agreements since 2007. Gentry held that an employment class action waiver was unenforceable as a matter of California public policy if the class action waiver would “undermine the ...

By Marisa S. Ratinoff and Amy B. Messigian

One of the main battlegrounds between employers and employees relates to the ability of employers to preclude class actions by way of arbitration agreements containing class action waivers. In California, the seminal case of Gentry v. Superior Court (“Gentry”) has had the practical effect of invalidating class action waivers in employment arbitration agreements since 2007. Gentry held that an employment class action waiver was unenforceable as a matter of California public policy if the class action waiver would “undermine the ...

By Marisa S. Ratinoff and Amy B. Messigian

One of the main battlegrounds between employers and employees relates to the ability of employers to preclude class actions by way of arbitration agreements containing class action waivers. In California, the seminal case of Gentry v. Superior Court (“Gentry”) has had the practical effect of invalidating class action waivers in employment arbitration agreements since 2007. Gentry held that an employment class action waiver was unenforceable as a matter of California public policy if the class action waiver would “undermine the ...

By Marisa S. Ratinoff and Amy B. Messigian

One of the main battlegrounds between employers and employees relates to the ability of employers to preclude class actions by way of arbitration agreements containing class action waivers.  In California, the seminal case of Gentry v. Superior Court (“Gentry”) has had the practical effect of invalidating class action waivers in employment arbitration agreements since 2007.  Gentry held that an employment class action waiver was unenforceable as a matter of California public policy if the class action waiver would “undermine the ...

By Lisa M. Watanabe

On December 3, 2013, the Fifth Circuit issued its much anticipated decision overturning the National Labor Relations Board’s (“NLRB”) controversial D.R. Horton, Inc. decision invalidating class action waivers and holding that requiring employees to sign such waivers violated employees’ rights under the National Labor Relations Act (the “Act”).  As previously reported in our earlier Act Now Advisory, the NLRB’s January 3, 2012 decision held that home builder D.R. Horton, Inc. (“D.R. Horton”) unlawfully interfered with  employees’ ...