Labor & Employment Law Daily Wrap Up, ARBITRATION—D. Mass.: Since at least one act of sexual harassment occurred after EFFA’s effective date, employee not required to arbitrate, (Sep 16, 2025)

By Marjorie Johnson, J.D.

The court squarely rejected the employer’s contention that the EFAA did not apply since the “primary allegations” of her coworker’s sexual harassment occurred “almost entirely” before the EFAA’s effective date.

A former employee who claimed she was sexually harassed by a male coworker from September 2021 until March 12, 2022, and fired in retaliation for complaining on March 14, 2022, plausibly alleged that her hostile work environment (HWE) and retaliation claims accrued after the EFFA’s effective date of March 3, 2022, and therefore she could not be forced to arbitrate her claims. Denying the employer’s motion to compel arbitration and, in the alternative, for an evidentiary hearing on whether she could prove the EFAA applied, a federal district court in Massachusetts explained that her HWE claim accrued on the date of the last alleged act, and the EFAA applied “notwithstanding that a portion of the allegations giving rise to these claims took place before the EFAA’s Effective Date” (Monteiro v. RAC Acceptance East, LLC, No. 1:24-cv-12772-IT (D. Mass. Sept. 11, 2025)).

Sexual harassment. In May 2019, the employer hired the employee as a sales assistant manager. After she transferred to a new location in September 2021, a male coworker began making sexually suggestive remarks towards her. For instance, he allegedly told her she touched and smelled her hair and said he “had a thing for girls with nice hair.” In October and November 2021, he allegedly made sexually inappropriate remarks on social media relating to her appearance and breasts. Then in January 2022, he allegedly asked her in person to show him her breasts, remarked that he liked her buttocks, and talked about his sexual relations in detail. At the end of January or beginning of February 2022, he showed her a picture of his groin area.

Complains, is fired. The employee claimed that towards the end of February or beginning of March 2022, she reported the coworker’s sexual harassment to the store manager. However, he dismissed her complaints and allegedly told the other staff that she was the only one not given a raise. She reported the retaliation to the regional manager, who promised to transfer her to a different location. Around March 12, 2022, the coworker allegedly texted her again about her breasts. On March 14, she was fired by the store manager.

Lawsuit. She filed this lawsuit alleging sexual harassment, sex discrimination, and retaliation under the Massachusetts anti-bias law. The employer moved to compel arbitration pursuant to the FAA based on an arbitration agreement she signed during her onboarding. She did not dispute that the agreement was valid and covered her claims, but instead argued that the EFAA applied and rendered the agreement invalid and unenforceable.

EFAA. The EFAA allows a person “alleging conduct constituting a sexual harassment dispute” to nullify mandatory arbitration agreements in cases that relate to the dispute. 9 U.S.C. § 402(a). A “sexual harassment dispute” means “a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal or State law.” § 401(4). A court decides whether the EFAA applies to a particular dispute.

“Effective date.” The EFAA applies “with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act,” which is March 3, 2022. Therefore, at issue was whether the employe’s claims “alleging conduct constituting a sexual harassment dispute” accrued after March 3, 2022.

Retaliation. The employee alleged that she was fired on March 14, 2022, in retaliation for resisting and reporting sexual harassment and discrimination. This claim constituted a “sexual harassment dispute” under FAA since the alleged unlawful adverse employment action “relat[es] to conduct that is alleged to constitute sexual harassment under applicable... State law.” Thus, the EFAA applied to the retaliation claim since it accrued after the effective date of the statute.

Hostile work environment. However, the employer argued that her claim that she was subjected to sexually hostile work environment accrued before the EFAA’s effective date since the “primary allegations” forming the alleged sexual harassment governed the accrual date, and the employee’s allegations “almost entirely” predated March 3, 2022. The court was unconvinced, noting that “[t]he EFAA makes no distinction between primary and non-primary allegations.” Rather, a HWE claim accrues on the date of the last alleged act.

Continuing violations doctrine. Pointing to Supreme Court precedent, the court explained that in determining when a claim accrues under the FAA, it must consider when the statute of limitations would start running. “Hostile work environment claims hold a distinct position in the world of claim accrual.” The Court has recognized that the “very nature” of HWE claims “involves repeated conduct,” and therefore it “cannot be said to occur on any particular day” but rather “over a series of days or perhaps years.” Thus, even if some of the sexual harassing conduct falls outside the statutory time period, a claim is still deemed timely filed if “at least one act” contributing to the claim falls within the filing period.

Here, the employee alleged that on March 12, 2022, the coworker sent her several text messages that mentioned her breasts. Under the continuing violation doctrine, her limitations period ran from that last alleged act of harassment. Accordingly, because “a cognizable act” occurred after the EFAA’s effective date, the arbitration agreement could not be invoked to compel arbitration.

No evidentiary hearing. The court also squarely rejected the employer’s contention that an evidentiary hearing was necessary to determine whether the employee could offer the necessary proof to establish that her claims could avoid arbitration pursuant to the EFAA. The EFAA does not require any such evidentiary hearing since the statute states that a person “alleging conduct constituting a sexual harassment dispute,” is entitled to EFAA’s protections. Whether EFAA applies thus depended on whether the employee’s claims were plausibly pled, not whether she could ultimately prevail. Accordingly, because she plausibly alleged her claims, there was no grounds for an evidentiary hearing.

The case is No. 1:24-cv-12772-IT.

Judge: Talwani, I

Attorneys: Michael O. Shea (Law Office of Michael O. Shea) for Mariah Monteiro. Alexa Marie Esposito (Littler Mendelson) for RAC Acceptance East, LLC and Jeremy Ead.

Companies: RAC Acceptance East, LLC

Cases: Arbitration Discrimination SexualHarassment SexDiscrimination Retaliation StateLawClaims MassachusettsNews