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by Shannon N. Claire, J.D., Employment Law Subject Matter Expert, CalChamber
Both California law and the Federal Arbitration Act (FAA) strongly favor enforcing valid arbitration agreements. But in March 2022, Congress enacted the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA), which allows an individual alleging sexual assault or sexual harassment to proceed in court, even if a valid arbitration agreement exists between the parties. So, if an employee alleges conduct that constitutes sexual harassment under applicable state, federal or tribal law, the EFAA allows an employee to bypass arbitration and instead bring their claims to court.
In a recent case, the Second District California Court of Appeal decided whether harassment based on sexual orientation constituted sexual harassment under the Fair Employment and Housing Act (FEHA), thereby triggering the EFAA exception (Decloedt v. Radnet Management, Inc., No. B343963 (June 26, 2026)).
In October 2024, an employee, Trevor Joseph Decloedt, filed a lawsuit in Los Angeles Superior Court against his employer, Radnet Management, Inc. (Radnet), and his supervisors alleging, among other things, sexual harassment in violation of FEHA. Decloedt alleged that he was harassed and discriminated against because of his sexual orientation. While Decloedt also alleged he was harassed and discriminated against based on disability, those allegations were not considered in this decision.
Decloedt alleged that a coworker made multiple statements to him, such as “You shouldn’t be gay; it’s not okay; it’s sinning.” And the same coworker told him, “I’m so angry, I could kill you.” In addition, this coworker repeatedly touched Decloedt’s hair, sometimes pulling it and at other times “caressing his hair and running her fingers through it.”
Decloedt alleged that he reported these incidents to multiple supervisors, but the company didn’t take any action. He also said that he disclosed the incidents to human resources, including that the situation had "taken such a toll on [him] that he had contemplated suicide.” About three months after Decloedt complained to HR, he was terminated. When he asked why he was being fired, HR allegedly responded, “it’s not working anymore,” without additional explanation.
Under FEHA, to prevail on a cause of action for sexual harassment, an employee must demonstrate that they were subjected to harassing conduct that was:
A hostile work environment exists when harassing conduct sufficiently offends, humiliates, distresses or intrudes upon the employee so that it interferes with the employee’s ability to perform their job.
At the outset of his employment, Decloedt signed an arbitration agreement agreeing to arbitrate all employment-related claims, so Radnet filed a motion to compel the employee to submit his claims to arbitration. In support of its motion, Radnet argued that the Federal Arbitration Act (FAA) governs the arbitration agreement and that both the FAA and the agreement obligated the employee to arbitrate all his employment-related claims against Radnet.
In opposing the employer’s motion, Decloedt argued that his claim of harassment based on his sexual orientation constituted a claim of sexual harassment within the meaning of the EFAA and, therefore, he was not required to submit his claims to arbitration. The trial court sided with the employee and denied the employer’s motion. Radnet appealed that decision.
In this case, the Court of Appeal had to determine whether harassment based on sexual orientation met the FEHA definition of sexual harassment. In its analysis, the court looked at both federal and California authority.
Although FEHA is a California law, it has a federal counterpart, Title VII of the Civil Rights Act of 1964, which bars an employer from “discriminat[ing] against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s… sex.” (42 U.S.C. § 2000e-2(a)(1).)
In Bostock v. Clayton County, the U.S. Supreme Court construed that Title VII provision to hold, “When an employer fires an employee because she is homosexual or transgender, two causal factors may be at play — both the individual’s sex and something else (the sex to which the individual is attracted or with which the individual identifies).”
The Bostock court went on to say that although “homosexuality and transgender status are distinct concepts from sex … discrimination based on homosexuality or transgender status necessarily entails discrimination based on sex.”
The Court of Appeal relied on Bostock’s construction of the statutory phrase “because of … sex” in Title VII in construing the same language in the FEHA statute. The court noted that “‘[b]ecause … the antidiscrimination objectives and public policy purpose of [FEHA and Title VII] are the same, California’s courts routinely rely on federal decisions to interpret analogous parts of FEHA.” Applying the U.S. Supreme Court’s decision to this case, the Court of Appeal concluded that harassment based on sexual orientation is a form of harassment because of sex under FEHA.
In support of its conclusion, the Court of Appeal cited a recent California case, Quilala v. Securitas Security Services USA, Inc., in which the complaining employee alleged that vulgar statements were made to him suggesting sexual acts between the employee and another male, and that he was referred to as “Mrs.” because of his perceived sexual orientation even though he is male.
After concluding that sexual orientation harassment is sex harassment under FEHA, the Court of Appeal assessed whether the Decloedt’s claims, assuming all the allegations were true, were sufficient to support a cause of action for sexual harassment, and it did determine they were sufficiently severe or pervasive to establish a hostile work environment. Because the EFAA’s sexual harassment exception applies, Decloedt is not required to submit his claims to arbitration.
Additionally, in a previously decided case, Liu v. Miniso Depot CA, Inc., the court held that “the plain language of the EFAA exempts a plaintiff’s entire case from arbitration where the plaintiff asserts at least one sexual harassment claim.” Applying that reasoning to this case, the court ruled that all the employee’s claims were exempt from arbitration — not just his sexual harassment claim.
Arbitration agreements should be reviewed with legal counsel to ensure they remain enforceable. Sexual harassment claims, whether based on sex or actual or perceived sexual orientation, are not subject to arbitration, even when the parties have an otherwise enforceable arbitration agreement.
In addition, the court’s decision highlights the need for employers to ensure they are diligent in their efforts to prevent harassment in the workplace, including:
Finally, when terminating an employee, employers should avoid vague statements like, “it’s not a good fit” or “it’s not working out.” This is especially important if the termination comes after the employee has engaged in a protected activity like complaining about workplace harassment.
In California, if an employee is terminated within 90 days of making a complaint (or engaging in other protected activity), the presumption is the termination was retaliatory and therefore unlawful. Instead, employers should be clear and direct with the employee about the reason for termination. If the termination is a result of poor performance or violation of company, that should be stated and backed up by supporting documentation (e.g., write-ups, emails, notes of verbal coaching, etc.).