California Court of Appeal Holds Sexual Orientation Harassment Triggers the EFAA

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In Decloedt v. Radnet Management, Inc., the California Second Appellate District affirmed the denial of an employer’s motion to compel arbitration, concluding that the plaintiff-respondent’s allegations of severe or pervasive sexual orientation harassment by a coworker fell squarely within the EFAA’s exemption from the Federal Arbitration Act (FAA).

Quick Hits

• In Decloedt v. Radnet Management, Inc., the California Court of Appeal, Second Appellate District, held that harassment on the basis of sexual orientation is a form of sexual harassment under FEHA and thus falls within the ambit of sexual harassment under the EFAA.
• The court relied on the Supreme Court of the United States’ reasoning in Bostock v. Clayton County, 590 U.S. 644 (2020), concluding that because discrimination based on sexual orientation necessarily entails discrimination based on sex, the same logic applies to harassment claims.
• The decision means that allegations of sexual orientation harassment may trigger the EFAA, rendering pre-dispute arbitration agreements unenforceable.

Background

In October 2024, Trevor Decloedt filed a complaint in state court against his former employers, his former supervisor, and a former coworker, alleging eleven California state law causes of action, including hostile work environment and sexual harassment discrimination under FEHA and harassment because of his sexual orientation.

Specifically, he alleged that beginning in early 2022, a coworker had subjected him to repeated derogatory comments about his sexual orientation, including telling him, “You shouldn’t be gay; it’s not okay; it’s sinning.” He further alleged that the coworker had exhibited aggressive behavior, threatening to kill him and pulling his hair on multiple occasions, culminating in a physical attack in November 2022 that caused him to flee to the bathroom for safety. Decloedt alleged that he reported these incidents to his supervisor and HR, but no corrective action was taken.

In December 2024, the defendants in the case moved to compel arbitration pursuant to an agreement Decloedt had signed at the outset of his employment. The trial court denied the motion, finding that the sexual harassment claim triggered the EFAA. The defendants appealed.

The Court of Appeal’s Analysis

The defendants’ appeal raised two principal arguments: (1) harassment based on sexual orientation is not a form of sexual harassment under FEHA, and (2) even if it were, the plaintiff-respondent (Decloedt) had failed to allege facts showing that the harassment was sufficiently severe or pervasive. The Court of Appeal rejected both arguments, affirming the trial court’s denial of the defendants’ motion to compel arbitration.

Sexual Orientation Harassment as Sexual Harassment

With regard to the defendants’ first argument, the court observed that FEHA prohibits an employer from harassing an employee “because of … sex … [or] sexual orientation.” Relying on Bostock v. Clayton County, Georgia, the court reasoned that “discrimination based on homosexuality or transgender status necessarily entails discrimination based on sex,” and that this logic “applies with equal force when determining whether an employer who has harassed an employee because of his or her homosexuality has engaged in harassment because of the employee’s sex.”

The court also rejected the defendants’ statutory structure argument. The defendants pointed to FEHA’s section 12940, subdivision (j)(4)(C), which provides that harassment “because of sex includes sexual harassment, gender harassment, and harassment based on pregnancy, childbirth, or related medical conditions,” arguing that the omission of “sexual orientation” from that list demonstrated it was a distinct category.

The court disagreed, holding that the word “includes” is “generally used as a word of enlargement and not of limitation,” and that by listing certain characteristics, the legislature had merely removed doubt about those categories without excluding others “inextricably intertwined with an employee’s sex.”

Severe or Pervasive Standard

Assuming for the sake of argument that the federal plausibility standard under Rule 12(b)(6) applied, the court found that Decloedt had sufficiently alleged severe or pervasive harassment. According to the court, his complaint could reasonably be read as alleging that over the course of several months, his former coworker had repeatedly chastised him because of his sexual orientation, had frequently expressed anger through death threats and hair-pulling, and on one occasion had attacked him with such force that he was forced to flee for his safety. Because the alleged conduct caused the employee to contemplate suicide, the court concluded it was sufficiently severe or pervasive to support a sexual harassment claim.

Key Takeaways

The court’s decision in Decloedt significantly expands the categories of harassment that can trigger the EFAA in California. Prior published California appellate decisions addressing the EFAA involved cases where the existence of sexual harassment was either undisputed or addressed only in passing. Decloedt is the first to squarely hold, as a matter of law, that sexual orientation harassment is sexual harassment under FEHA.

Employers in California should be aware that employees alleging harassment based on sexual orientation, in addition to those alleging more traditional forms of sexual harassment, may now invoke the EFAA to avoid arbitration of their cases. Employers may wish to review their anti-harassment policies and training programs to ensure they address sexual orientation harassment and consider the litigation risk posed by the EFAA’s broad exemption when evaluating the enforceability of their arbitration agreements.

Ogletree Deakins’ California offices, Appellate Practice Group, and Arbitration and Alternative Dispute Resolution Practice Group will continue to monitor developments and will provide updates on the Arbitration and Alternative Dispute Resolution and California blogs as additional information becomes available.

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