The big picture: The U.S. Court of Appeals for the Ninth Circuit ruled that employees can bypass mandatory arbitration agreements and pursue lawsuits in court under the Ending Forced Arbitration Act (EFAA). This decision significantly impacts how employment disputes, particularly those involving sexual harassment or assault, are resolved.

Why it matters: This ruling shifts power dynamics in employment disputes, potentially increasing litigation risks and costs for companies, including staffing firms, by limiting the enforceability of pre-dispute arbitration clauses for covered claims.

Between the lines:

• The decision stems from the case Ding v. Structure Therapeutics, Inc.

• The EFAA, enacted in 2022, allows individuals to elect to invalidate pre-dispute arbitration agreements for claims of sexual assault or sexual harassment.

• The Ninth Circuit affirmed that employees can choose to litigate these specific claims in court, even if an arbitration agreement exists.

Staffing & HR impact: Staffing firms and HR departments must review and potentially revise their arbitration agreements, especially concerning sexual harassment and assault claims, to ensure compliance. This could lead to more court cases and higher legal expenses for employers.

The bottom line: Employers face increased scrutiny on arbitration clauses, signaling a stronger push for employee litigation rights in specific circumstances.