Labor & Employment Law Daily Wrap Up, ARBITRATION—S.D.N.Y.: Wage claims filed with sexual harassment claims render entire arbitration agreement unenforceable, (Nov 18, 2025)

By Todd Harrison, J.D.

Where the EFAA is properly invoked and applies, a pre-dispute arbitration agreement is invalid and unenforceable as to the entire case, not just to the sexual harassment claims.

Reversing in part a magistrate judge’s decision granting an employer’s motion to compel arbitration of a former employee’s FLSA and NYLL claims involving minimum wage and overtime allegations, the U.S. District Court for the Southern District of New York determined that, because the employee’s case also alleged sexual harassment claims in violation of the NYSHRL and the NYCHRL, the EFAA precluded the entire case from the parties’ pre-dispute arbitration agreement. The use of the word “case” in the statutory language of the EFAA captures the legal proceeding as a whole and does not differentiate among various claims within it. Further, the court held that a claim “relates to” a dispute under the EFAA wherein a claim arises from the employer-employee relationship (Mera v. SA Hospitality Group, LLC, No. 23 Civ 3492 (PGG) (SDA) (S.D.N.Y. Nov. 17, 2025)).

The plaintiff in this case worked as a busser at a café from May 2022 to February 2023. At the time of his hiring, he entered into an agreement with the employer that included a mandatory arbitration provision.

Wage and hour claims. According to the employee, the employer instituted “invalid” policies concerning tips, leading him to file FLSA and New York Labor Law (NYLL) claims on behalf of himself and others similarly situated.

Hostile work environment claims. The employee further alleged that he was subjected to a hostile work environment based on his sexual orientation, suffering from constant harassment and abuse by his coworkers and his manager.

Lawsuit. On April 26, 2023, the employee filed this complaint, bringing a putative collective and class action concerning his wage and hour claims under the FLSA and the NYLL, as well as an individual action asserting hostile work environment and sexual orientation discrimination claims under the New York State Human Rights Law (NYSHRL) and the New York City Human Rights Law (NYCHRL).

Magistrate. The case was referred to a magistrate judge for general pretrial supervision, and the employer moved to compel arbitration. The magistrate judge denied the employer’s motion to compel arbitration of the employee’s individual NYSHRL and NYCHRL claims, finding they fell within the scope of the Ending Forced Arbitration Act. However, as to the employee’s FLSA and NYLL wage and hour claims, the magistrate judge concluded that arbitration in compliance with the parties’ agreement may be compelled.

Subsequently, the employee appealed the magistrate judge’s order to the extent that it granted the employer’s motion to compel arbitration of his FLSA and NYLL claims. The employee contended that the magistrate judge’s order erred in “disregard[ing] the plain meaning of the [Ending Forced Arbitration Act’s] text” by not construing the Act to “void” “any predispute arbitration agreement... with respect to the plaintiff’s entire case, not just the plaintiff’s sexual harassment claims.”

According to the employee, because he had filed a single case containing both sexual harassment and wage claims, all his claims were non-arbitrable. The court here considered the employee’s argument.

Johnson.Johnson v. Everyrealm, Inc., 657 F. Supp. 3d 535 (S.D.N.Y. 2023), was one of the first cases to address a similar argument. There, the plaintiff had filed suit against his employer alleging claims for sexual harassment as well as unrelated discrimination and retaliation claims. The employer argued that the EFAA blocked arbitration only of the sexual harassment claims, not “the entire case.” The court rejected that argument.

Based on the ordinary meaning of the language used in the EFAA, the court found the text to be clear, unambiguous, and decisive to the issue at hand, noting that the statutory language “keys the scope of the invalidation of the arbitration clause to the entire ‘case’ relating to the sexual harassment dispute. It thus does not limit the invalidation to the claim or claims in which that dispute plays a part.”

In reaching this holding, the Johnson court surveyed the use of “case” and “claim” as used in case law and in ordinary definitions, concluding that “case” refers to the overall legal proceeding filed in a court, while “claim” refers to a specific asserted or assertable right within a proceeding.

Since Johnson, most courts in this district confronting this issue have concluded that where the EFAA applies and is invoked by the plaintiff, an arbitration agreement is unenforceable as to the plaintiff’s entire “case,” and not just with respect to a plaintiff’s sexual harassment claims.

Statutory text. Turning to the case at hand, the court here first looked to the text of the EFAA, which provides that “no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.”

Moreover, the court noted that Congress used the term “claim”—rather than “case”—elsewhere in the statute concerning its effective date, and when Congress includes particular language in one section of a statute but omits it in another, it intended a difference in meaning. Congress’s choice to amend the FAA directly with text broadly blocking enforcement of an arbitration clause with respect to an entire “case” relating to sexual harassment claims reflects its rejection of the FAA norm of allowing individual claims in a lawsuit to be parceled out to arbitrators, said the court here, referring back to language found in Johnson.

Employment relationship. The court in this instance further concluded that a claim “relates to” a sexual harassment dispute under the EFAA where, as here, that claim—like the sexual harassment claim—arises from a plaintiff’s employment and relates to a plaintiff’s own experience working for the employer.

Legislative history. In an effort to avoid the result reached by the court, the employer in this case pointed to the legislative history of the EFAA, including quoting Senator Lindsey Graham, who stated that the EFAA does not “take unrelated claims out of the arbitration contract. So, if you have got an hour-and-wage dispute with the employer, you make a sexual harassment, sexual assault claim, the hour-and-wage dispute stays under arbitration unless it is related. That is the goal.” The court remained unmoved.

When the text of a statute provides a clear answer, as here, the court’s analysis ends, and any reliance on legislative history to reach a contrary result is necessarily precluded, explained the court.

Agreement unenforceable. In conclusion, the court explained that where—as in this case—the EFAA is properly invoked and applies, a pre-dispute arbitration agreement is invalid and unenforceable as to the plaintiff’s entire case, and not just the sexual harassment claims. Accordingly, the magistrate judge’s holding that the employee’s FLSA and NYLL claims must be arbitrated was clearly erroneous and contrary to law. As such, the magistrate’s order denying the employer’s motion to compel arbitration of the NYSHRL and NYCHRL claims was affirmed, while the portion of the order compelling arbitration of the employee’s FLSA and NYLL claims was reversed.

The case is No. 23 Civ 3492 (PGG) (SDA).

Judge: Gardephe, P.

Attorneys: C.K. Lee (Lee Litigation Group) for Danilo Mera. Richard Ian Greenberg (Jackson Lewis) for Cafe Focaccia, Inc. dba Felice Wine Bar.

Companies: Cafe Focaccia, Inc.; Felice Wine Bar

Cases: Arbitration Discrimination SexualHarassment Procedure StateLawClaims WageHour ClassActions NewYorkNews GCNNews