California Court of Appeal Rules Sexual Orientation Harassment Triggers Federal Prohibition on Forced Arbitration

In a landmark decision that significantly alters the landscape of employment litigation in California, the California Court of Appeal for the Second Appellate District has ruled that harassment based on sexual orientation constitutes "sexual harassment" under the state’s Fair Employment and Housing Act (FEHA). This legal determination carries profound consequences because it serves as a trigger for the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), a federal statute that allows plaintiffs to bypass mandatory arbitration agreements in cases involving sexual misconduct. The ruling in Decloedt v. Radnet Management, Inc. marks the first time a California appellate court has explicitly linked sexual orientation harassment to the EFAA’s exemptions, effectively opening the doors of the public courtroom to a broader class of litigants who were previously bound by private arbitration clauses.

The appellate court’s decision affirmed a lower court’s denial of an employer’s motion to compel arbitration, signaling a shift in how judicial bodies interpret the intersection of state anti-discrimination laws and federal arbitration mandates. By aligning the definition of sexual orientation harassment with the broader category of sexual harassment, the court has expanded the protections afforded to LGBTQ+ employees and created a new precedent that California employers must navigate with caution.

The Genesis of Decloedt v. Radnet Management, Inc.

The case originated in October 2024, when Trevor Decloedt filed a comprehensive complaint in California state court against his former employer, Radnet Management, Inc., along with his former supervisor and a former coworker. Decloedt’s lawsuit alleged eleven distinct causes of action under California law, including a hostile work environment, sexual harassment, and discrimination under FEHA, specifically citing harassment based on his sexual orientation.

The factual allegations detailed in the complaint painted a picture of a workplace characterized by hostility and physical danger. Decloedt alleged that, beginning in early 2022, a coworker began a campaign of verbal abuse centered on Decloedt’s sexual orientation. According to court documents, the coworker frequently made derogatory religious and moral judgments, telling Decloedt, “You shouldn’t be gay; it’s not okay; it’s sinning.”

The situation reportedly escalated beyond verbal insults into physical intimidation and violence. Decloedt alleged the coworker made multiple death threats and engaged in repeated physical assaults, including pulling his hair on several occasions. The conflict culminated in a November 2022 incident where the coworker allegedly launched a physical attack so severe that Decloedt was forced to flee to a bathroom and lock himself inside for safety. Despite reporting these incidents to both his direct supervisor and the Human Resources department, Decloedt claimed that management failed to take any corrective or disciplinary action, allowing the hostile environment to persist.

Procedural History and the Arbitration Challenge

In response to the lawsuit, the defendants moved to compel arbitration in December 2024. They pointed to a mandatory arbitration agreement that Decloedt had signed as a condition of his employment, arguing that the Federal Arbitration Act (FAA) required the dispute to be resolved in a private forum rather than a public court. Under traditional FAA interpretations, such agreements are generally enforceable and serve to divert employment disputes away from juries.

However, the legal landscape regarding arbitration changed significantly with the passage of the EFAA in 2022. The EFAA amended the FAA to provide that, at the election of the person alleging conduct constituting a sexual harassment dispute or a sexual assault dispute, no predispute arbitration agreement shall be valid or enforceable.

The trial court denied Radnet’s motion to compel arbitration, finding that Decloedt’s allegations of sexual orientation harassment fell under the EFAA’s definition of a "sexual harassment dispute." The defendants appealed this ruling, setting the stage for the Second Appellate District to provide clarity on whether sexual orientation harassment and sexual harassment are legally synonymous for the purposes of federal arbitration exemptions.

A Chronology of the Legal Dispute

To understand the weight of this ruling, it is necessary to examine the timeline of both the case and the underlying legislation:

• Early 2022: Alleged harassment begins against Trevor Decloedt at Radnet Management.
• March 2022: President Joe Biden signs the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA) into law, providing a federal carve-out for sexual misconduct claims.
• November 2022: The alleged physical attack occurs, leading to Decloedt’s departure from the company.
• October 2024: Decloedt files his lawsuit in state court, asserting claims under FEHA.
• December 2024: Radnet Management moves to compel arbitration based on Decloedt’s employment contract.
• Early 2025: The trial court denies the motion to compel, citing the EFAA.
• May 2025 (Approximate): The California Court of Appeal issues its published opinion in Decloedt v. Radnet Management, Inc., affirming the trial court’s decision.

Analysis of the Court’s Reasoning

The Court of Appeal’s analysis focused on two primary arguments raised by the defendants. First, the defendants argued that harassment based on sexual orientation is a distinct legal category from sexual harassment under FEHA. Second, they contended that even if the categories overlapped, Decloedt’s allegations did not meet the "severe or pervasive" legal standard required to sustain a harassment claim.

The Intersection of Sex and Sexual Orientation

The court’s rejection of the first argument relied heavily on the logic established by the United States Supreme Court in the 2020 case Bostock v. Clayton County, Georgia. In Bostock, the Supreme Court held that Title VII’s prohibition on discrimination "because of sex" necessarily includes discrimination based on sexual orientation and gender identity, because it is impossible to discriminate against a person for being gay or transgender without discriminating against that individual based on sex.

The California Court of Appeal applied this logic to FEHA. While the defendants pointed out that FEHA lists "sex" and "sexual orientation" as separate protected categories, the court held that this was not intended to make them mutually exclusive. The court noted that FEHA’s definition of harassment "because of sex" includes sexual harassment, gender harassment, and pregnancy-related harassment. The court interpreted the word "includes" as a term of enlargement, not limitation. By this reasoning, because sexual orientation is "inextricably intertwined" with an employee’s sex, harassment based on the former is inherently harassment based on the latter.

Meeting the Severe or Pervasive Standard

The court also dismissed the defendants’ claim that the alleged conduct was not sufficiently "severe or pervasive" to trigger the EFAA. In California, a hostile work environment claim requires evidence that the conduct was enough to alter the conditions of employment and create an abusive environment.

The court found that the combination of derogatory slurs, repeated death threats, hair-pulling, and a physical attack that caused the plaintiff to fear for his life easily met this threshold. The court specifically highlighted that the alleged conduct was so traumatic that it led Decloedt to contemplate suicide, reinforcing the "severe" nature of the harassment. Consequently, the court ruled that the allegations were sufficient to categorize the case as a "sexual harassment dispute" under the EFAA, thereby rendering the arbitration agreement unenforceable.

Broader Impact and Statistical Context

The Decloedt decision arrives at a time of heightened scrutiny regarding forced arbitration in the United States. According to the Economic Policy Institute, more than 60 million American workers are currently subject to mandatory arbitration clauses, which often prevent employees from publicly airing grievances related to discrimination or abuse.

The EFAA was designed to restore access to the courts for victims of sexual misconduct, but its scope has been a subject of intense litigation since its inception. Prior to the Decloedt ruling, there was ambiguity in California regarding whether harassment based on sexual orientation—rather than sexual advances or gender-based animus—qualified for the EFAA exemption.

Data from the UCLA Williams Institute suggests that nearly 46% of LGBTQ+ workers have experienced unfair treatment at work, including harassment or discrimination, at some point in their careers. By categorizing sexual orientation harassment as a form of sexual harassment, the California Court of Appeal has significantly widened the "exit ramp" from arbitration for nearly half of the LGBTQ+ workforce in the state.

Implications for California Employers

This ruling serves as a critical wake-up call for employers, human resources professionals, and legal departments across California. The ability to enforce arbitration agreements has long been a cornerstone of corporate risk management, as arbitration is typically faster, less expensive, and more private than jury trials. However, the Decloedt decision demonstrates that these agreements are increasingly vulnerable.

Policy and Training Updates

Employers must now ensure that their anti-harassment policies and training programs explicitly treat sexual orientation harassment with the same level of legal gravity as traditional sexual harassment. If a supervisor or HR representative fails to address complaints of sexual orientation slurs or threats, the company not only faces liability under FEHA but also loses the protection of its arbitration agreements.

Litigation Strategy

From a litigation standpoint, the ruling means that plaintiffs’ attorneys will likely lean more heavily on sexual orientation-based allegations to keep cases in state or federal court. Employers should expect a rise in "EFAA challenges" to arbitration motions, where plaintiffs argue that various forms of gender-related or orientation-related misconduct fall under the federal exemption.

Insurance and Risk Assessment

Insurance carriers providing Employment Practices Liability Insurance (EPLI) may also take note of this shift. As more cases move from private arbitration to public courtrooms, the potential for high-value jury awards increases, which may eventually impact premiums and coverage terms for California-based businesses.

Conclusion: A New Era of Workplace Accountability

The California Court of Appeal’s decision in Decloedt v. Radnet Management, Inc. represents a significant evolution in the interpretation of both state and federal law. By recognizing that harassment based on sexual orientation is inherently linked to an individual’s sex, the court has ensured that LGBTQ+ employees have the same right as any other victim of sexual harassment to seek justice in a public forum.

As the EFAA continues to be tested in courts across the country, the Decloedt case stands as a definitive marker in California’s legal history. It reinforces the principle that procedural mechanisms like arbitration cannot be used to shield employers from the public consequences of allowing a hostile and discriminatory workplace to flourish. For Trevor Decloedt and those who follow, the path to the courthouse is now more clearly defined, while for employers, the necessity of proactive and effective workplace management has never been more urgent.