Under basic contract law, yes. But thanks to the Ending Forced Arbitration Act, that may not be the end of the story.
TL;DR: The New Jersey Appellate Division held that a mutual arbitration agreement was valid and enforceable, reversing a trial court that had voided it. But because the employee raised the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA) on appeal, the case was remanded to determine whether that federal statute prevents arbitration of her claims.
A long-time employee signs an arbitration agreement
The employee began working in 1997. More than twenty years later, she electronically signed a mutual arbitration agreement, and later signed an updated version.
The agreement required both sides to arbitrate employment-related claims, including harassment and discrimination. It clearly stated that signing meant giving up the right to a judge or jury trial. It also included a separate opt-out section and gave employees thirty days to opt out.
She did not opt out.
Then came the lawsuit
In late 2022, the employee learned that coworkers and supervisors had been using a private group chat to refer to her and others with racist and sexist slurs. She sued under the New Jersey Law Against Discrimination, claiming hostile work environment and aiding-and-abetting.
The employer moved to dismiss and compel arbitration. She did not initially oppose the motion, and the trial court ordered arbitration.
On reconsideration, however, the trial court reversed itself and ruled the arbitration agreement was not enforceable because it lacked consideration and mutual assent.
The employer appealed.
The agreement survives contract review
The appellate court reversed.
Under New Jersey law, continued at-will employment, along with mutual promises to arbitrate, is sufficient consideration. Her electronic signature demonstrated assent. The waiver language was clear. The opt-out instructions were plainly presented.
Under standard contract principles, the agreement is valid.
But that does not end the analysis.
The federal overlay
For the first time on appeal, the employee argued that even if the agreement is valid, her claims cannot be forced into arbitration under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.
Although appellate courts typically refuse to consider arguments raised for the first time on appeal, the court invoked the “great public interest” exception, noting that the scope and application of the EFAA is a matter of significant public importance.
The EFAA, which applies nationwide, allows someone alleging a sexual harassment dispute to choose court instead of arbitration, even if they previously signed an arbitration agreement.
Because the issue was not raised below, there was no factual record. The case was remanded for the trial court to determine whether the EFAA applies.
The employer cleared the state-law contract hurdle. Whether it clears the federal one remains to be seen.
What employers should take away
1. In New Jersey, continued employment can be enough.
If you roll out arbitration to existing at-will employees, NJ courts will treat continued employment and mutual promises as sufficient consideration. Other states may analyze this differently.
2. Clear drafting still controls.
Even in arbitration-skeptical environments, courts will enforce agreements that clearly explain the waiver of the right to sue and provide a meaningful opt-out.
3. The EFAA changes the analysis everywhere.
Nationwide, harassment cases now require a second step: even a valid agreement may be unenforceable if the dispute qualifies as a sexual harassment claim under the statute.
4. Address EFAA early.
If the allegations could be characterized as sexual harassment, evaluate and brief the issue at the motion-to-compel stage. Delay invites remand and added cost.
5. Arbitration is no longer automatic in harassment disputes.
Enforceable under state contract law does not automatically mean arbitrable under federal law.
Bottom line
In New Jersey, a properly drafted arbitration agreement remains enforceable under traditional contract principles.
But nationwide, after the EFAA, enforceable does not automatically mean arbitrable.