By: Ty Hyderally,  Esq. and Francine Foner, Esq.

July 6, 2026

The Ending Forced Arbitration of Sexual Assault and Harassment Act of 2021 (EFAA), 9 U.S.C. §§ 401- 02, prohibits arbitration of an employee’s sex-based harassment, discrimination, and retaliation cases. However, what happens when an employee files claims for sex-based harassment claims, together with other types of discrimination claims?

In a significant victory for employees asserting sexual harassment workplace discrimination and harassment claims, the New Jersey Appellate Division recently held that an employer could not force a worker to separately arbitrate her race discrimination claim while litigating her sexual harassment and retaliation claims in court. In a recent unpublished opinion, the Appellate Division confirmed that when a case includes sexual harassment allegations that are grounded in the same facts as other discrimination claims in a complaint, employers generally cannot divide the lawsuit and send selected claims to arbitration.  Phillips v. Brink’s Inc., 2026 N.J. Super. Unpub. LEXIS 1082, 2026 LX 293049, 2026 WL 1477305  (May 27, 2026).

The Facts

Tiffany Phillips alleged that coworkers at Brinks Incorporated participated in a disturbing text-message chain containing racial slurs, sexist insults, sexually charged comments, and derogatory references directed at herself, as well as other Black and female employees. She claimed that after reporting the misconduct, the company failed to take appropriate corrective action and later terminated her employment in retaliation for her complaints about harassment and discrimination. She brought claims for hostile work environment, race discrimination, retaliation, and aiding-and-abetting liability under the New Jersey Law Against Discrimination (LAD). Ms. Phillips sued Brinks, her supervisor Nelson Alvarez, and Elizabeth Gramigna, Esq., who Ms. Phillips alleged investigated the allegations and failed to take any action in response to her complaint.

The employer sought to enforce an arbitration agreement signed by Ms. Phillips. While acknowledging that federal law prohibited arbitration of Ms. Phillips’ sex-based harassment claims, Brinks and the individual defendants argued that her race discrimination claim should be severed from the lawsuit and compelled to arbitration. The trial court agreed and ordered the race discrimination claim into arbitration while allowing the remaining claims to proceed in court.

The Appellate Division Reverses

The Appellate Division reversed.

Relying on its recent decision in McDermott v. Guaranteed Rate, Inc, 483 N.J. Super. 264 (App. Div. 2025), the court explained that the EFAA does not merely protect individual sexual harassment claims. Rather, when a lawsuit relates to a sexual harassment dispute, the statute renders arbitration agreements unenforceable as to the entire case.

The court emphasized that Congress chose the word “case” instead of “claim.” As a result, employers cannot isolate certain causes of action and force them into arbitration simply because those claims are not expressly labeled as sexual harassment claims.

In Ms. Phillips’s case, the race discrimination allegations arose from the same course of workplace misconduct as her sex-based claims. The court found that her allegations of racial and sexual harassment were intertwined and based on the same underlying facts and employment relationship. Therefore, none of her claims could be compelled to arbitration.

Why This Decision Matters for Employees

This ruling is important because employers frequently attempt to use arbitration agreements to move employment disputes out of the public court system and into private arbitration proceedings.

The Appellate Division’s decision sends a clear message: when an employee asserts viable sexual harassment claims, an employer cannot evade the protections of the EFAA by slicing the case into separate pieces and sending selected claims to arbitration.

For employees, that means:

• A greater opportunity to have all related claims heard in a single forum.
• Less risk of inconsistent outcomes between arbitration and court proceedings.
• More efficient litigation of related discrimination, harassment, and retaliation claims.
• Stronger enforcement of the protections Congress intended when it enacted the EFAA.

What Employees Should Know

Employees often experience discrimination in ways that overlap across multiple protected characteristics. Race, sex, pregnancy, age, disability, and retaliation claims frequently arise from the same workplace events.

Phillips recognizes that reality. An employer should not be able to force an employee to pursue one portion of a discrimination case before a private arbitrator while litigating the remainder in court. When sexual harassment allegations are part of the case, New Jersey courts are increasingly recognizing that the entire dispute belongs in one forum.

If you believe you have experienced workplace discrimination, harassment, or retaliation, experienced employment counsel can help evaluate your rights under the New Jersey Law Against Discrimination and applicable federal law.

If you have any questions regarding your rights as an employee, you should seek an experienced attorney who concentrates in employment law. Our firm has been concentrating in employment law for over twenty-three (23) years!

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