A new federal law invalidating pre-dispute arbitration agreements for sexual harassment and sexual assault claims does not apply retroactively, a New Jersey appeals court recently confirmed.

In Zuluaga v. Altice USA (N.J. App. Div. Nov. 29, 2022), the plaintiff had signed an arbitration agreement waiving her right to bring employment-related disputes in court when she joined her employer, Altice USA, in November 2020.  In October 2021, the plaintiff sued Altice for sexual harassment and constructive discharge claims under the New Jersey Law Against Discrimination (“NJLAD”).

The Appellate Division affirmed the lower court’s order compelling arbitration based on the parties’ arbitration agreement.  The appeals court rejected the plaintiff’s argument that the recently enacted Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (“EFAA”) invalidated her arbitration agreement.

The EFAA, which we covered in detail here, invalidates pre-dispute arbitration agreements that preclude an individual from bringing sexual harassment or sexual assault claims in court.  The law went into effect immediately upon its enactment on March 3, 2022.  Because the court found the plaintiff’s sexual harassment claim accrued no later than October 27, 2021 (when she filed her lawsuit), the EFAA would have to apply retroactively in order to apply to the plaintiff’s claim.

However, the Appellate Division pointed out that the plain text of the EFAA makes clear that the law is not retroactive by stating, “This Act, and the amendments made by this Act, shall apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act” (emphasis added).  The court also held that the EFAA’s non-retroactivity still controls even when, as in this case, the arbitration proceedings have not yet taken place, so long as the claim itself accrued pre-enactment.

Section 12.7 of the NJLAD states that provisions in employment contracts that waive substantive or procedural rights related to discrimination, retaliation, or harassment claims are against public policy and unenforceable.  However, the Appellate Division found that the Federal Arbitration Act (“FAA”) preempts this section of the NJLAD.  While the plaintiff also argued that the EFAA’s passage eliminated this FAA preemption, the court disagreed, finding that any effect the EFAA had on FAA preemption of state law would also only apply post-March 3, 2022.

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Photo of Evandro Gigante Evandro Gigante

Evandro Gigante is a partner in the Labor & Employment Law Department and co-head of the Employment Litigation & Arbitration group and the Hiring & Terminations group. He represents and counsels clients through a variety of labor and employment matters, including allegations of…

Evandro Gigante is a partner in the Labor & Employment Law Department and co-head of the Employment Litigation & Arbitration group and the Hiring & Terminations group. He represents and counsels clients through a variety of labor and employment matters, including allegations of race, gender, national origin, disability and religious discrimination, sexual harassment, wrongful discharge, defamation and breach of contract. Evandro also counsels employers through reductions-in-force and advises clients on restrictive covenant issues, such as confidentiality, non-compete and non-solicit agreements.

With a focus on discrimination and harassment matters, Evandro has extensive experience representing clients before federal and state courts. He has tried cases in court and before arbitrators and routinely represents clients before administrative agencies such as the Equal Employment Opportunity Commission, as well as state and local human rights commissions.

Photo of Laura Fant Laura Fant

Laura Fant is a special employment law counsel in the Labor & Employment Law Department and co-administrative leader of the Counseling, Training & Pay Equity Practice Group. Her practice is dedicated to providing clients with practical solutions to common (and uncommon) employment concerns…

Laura Fant is a special employment law counsel in the Labor & Employment Law Department and co-administrative leader of the Counseling, Training & Pay Equity Practice Group. Her practice is dedicated to providing clients with practical solutions to common (and uncommon) employment concerns, with a focus on legal compliance, risk management and mitigation strategies, and workplace culture considerations.

Laura regularly counsels clients across numerous industries on a wide variety of employment matters involving recruitment and hiring, employee leave and reasonable accommodation issues, performance management, and termination of employment . She also advises on preparing, implementing and enforcing employment and separation agreements, employee handbooks and company policies, as well as provides training on topics including discrimination and harassment in the workplace. Laura is a frequent contributor to Proskauer’s Law and the Workplace blog and The Proskauer Brief podcast.

Photo of Dixie Morrison Dixie Morrison

Dixie Morrison is an associate in the Labor & Employment Department and a member of the Employment Litigation & Arbitration Group. She is a member of the Discrimination, Harassment, & Title VII and the Labor-Management Relations practice groups.

Dixie assists clients across a…

Dixie Morrison is an associate in the Labor & Employment Department and a member of the Employment Litigation & Arbitration Group. She is a member of the Discrimination, Harassment, & Title VII and the Labor-Management Relations practice groups.

Dixie assists clients across a variety of industries in litigation and arbitration relating to wrongful termination, discrimination, harassment, retaliation, wage and hour, trade secrets, breach of contract, and whistleblower matters in both the single-plaintiff and class and collective action contexts. She also maintains an active traditional labor and collective bargaining practice and regularly counsels employers on a diverse range of workplace issues.

Dixie earned her J.D. from Harvard Law School, where she was the Executive Editor of Submissions for the Journal of Sports and Entertainment Law. Dixie received her B.A., magna cum laude, from Pomona College. Prior to law school, she served as a labor and economic policy aide in the United States Senate.