CALIFORNIA LEGAL UPDATE: Fired CFO Can Leave Arbitration to Sue for Sexual Harassment: Here’s What California Workers Need to Know

If you signed an arbitration agreement when you started your job, you may assume you gave up your right to take your employer to court.

But when a dispute involves sexual harassment or sexual assault, federal law may give you a choice, even if your employment agreement says arbitration is mandatory.
And according to a significant new Ninth Circuit decision, an employee may not necessarily lose that right simply because she already started arbitration before discovering the facts supporting her sexual harassment claim.

On August 19, 2026, a divided three-judge panel of the U.S. Court of Appeals for the Ninth Circuit ruled in Ding v. Structure Therapeutics, Inc., No. 25-1532, that a former chief financial officer who had already spent more than a year in arbitration could pursue newly discovered sex-based harassment claims in court.

The 2-1 decision addresses an important question under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA): What happens when an employee signs an arbitration agreement and even begins arbitration, but later discovers facts supporting a sexual harassment claim?

For California employees and employers, the answer matters.

What Is the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act?

Congress enacted the EFAA in 2022 to give people alleging sexual harassment or sexual assault disputes greater control over where their claims are heard.

The law amended the Federal Arbitration Act to provide that, “at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute,” a predispute arbitration agreement is unenforceable with respect to a qualifying dispute.

In practical terms, when the EFAA applies, a person alleging a sexual harassment or sexual assault dispute can elect to pursue the dispute in court rather than be forced into arbitration under a predispute arbitration agreement.

That means signing a mandatory arbitration agreement at the beginning of employment does not necessarily mean an employee must arbitrate a later sexual harassment or sexual assault dispute.

But the details matter. Among other issues, courts have had to determine when a qualifying dispute arises, whether the EFAA applies based on the timing of the dispute, and what constitutes an effective election between arbitration and court.

The Ninth Circuit's decision in Ding addresses another important question:

What happens when you don't discover the facts supporting your sexual harassment claim until after arbitration has already begun?

The Facts Behind Ding v. Structure Therapeutics

Dr. Ding Ding, a Wharton-educated pharmacologist with more than two decades of experience in biopharmaceutical investment banking and equity research, was hired as CFO of Structure Therapeutics, Inc. in December 2021 as the clinical-stage drug company prepared for an initial public offering.

According to the Ninth Circuit's opinion, CEO Dr. Raymond Stevens had circulated an internal email describing his “ideal phenotype” for the CFO position using only male examples, even though the company's board had emphasized the importance of gender diversity in hiring.

After Ding began working for the company, she alleged that Stevens sidelined her, narrowed her responsibilities, and relayed complaints from male Wall Street bankers that she was “too aggressive” and had “lectured” them.

The situation escalated after Ding experienced a domestic violence incident in March 2022 that left her with visible facial injuries. According to the allegations described by the court, Stevens minimized her injuries, questioned whether she could continue in her position, and excluded her from executive meetings.

Within weeks, Stevens recommended terminating her employment, allegedly citing her “domestic situation.” The company later replaced Ding with a male CFO.

Ding Initially Went to Arbitration, But She Wasn't Yet Alleging Sex-Based Harassment

This distinction is critical to understanding the Ninth Circuit's decision.

Ding's offer letter required employment disputes to be resolved through binding, confidential arbitration.

In October 2022, Ding filed an arbitration demand against the company. At that time, she asserted discrimination and harassment claims based on national origin and her status as a domestic violence victim.

She did not allege sex-based harassment.

The arbitration proceeded for more than a year through preliminary hearings, discovery, and stipulations.

But during discovery, Ding obtained evidence that she believed showed something she had not known when she initiated arbitration: her sex may have played a role in how she was treated.

That evidence included Stevens's “ideal phenotype” email, evidence concerning the board's gender-diversity concerns, and evidence regarding complaints from male bankers that allegedly factored into the decision to push her out.

In October 2023, Ding withdrew from arbitration, initially citing the company's late payment of arbitration fees under California Code of Civil Procedure section 1281.98.

She subsequently filed suit alleging, among other things, sex discrimination and a sex-based hostile work environment under California's Fair Employment and Housing Act (FEHA).

Structure Therapeutics moved to compel arbitration.

The dispute eventually reached the Ninth Circuit.

The Ninth Circuit: Starting Arbitration Did Not Automatically End Her EFAA Rights

Structure Therapeutics argued that Ding had already made her choice.

She signed an arbitration agreement. She filed an arbitration demand. And she participated in arbitration for more than a year.

According to the company, she could not later invoke the EFAA and choose court.

In a 2-1 decision, the Ninth Circuit disagreed.

Writing for the majority, Judge Gabriel P. Sanchez concluded that nothing in the EFAA categorically prevents someone from invoking its protections simply because that person previously arbitrated other claims.

The majority focused on an important point: Ding was not alleging a sexual harassment dispute when she initially filed for arbitration.

In other words, this was not a situation in which Ding knowingly possessed a sexual harassment claim, chose to arbitrate that claim for a year, and then simply changed her mind about the forum.

Instead, according to the majority, the evidence supporting the sex-based harassment theory emerged during arbitration.

That distinction made all the difference.

The Key Question: What Did the Employee Know When She Chose Arbitration?

The EFAA gives the person alleging a qualifying sexual harassment or sexual assault dispute an “election” regarding whether to enforce a predispute arbitration agreement.

But an election requires a meaningful choice.

The majority reasoned that Ding could not have elected between arbitration and court for a sex-based harassment claim when she did not yet know the facts supporting that claim.

As the Ninth Circuit explained, Ding “made an election only one time — when she chose to pursue the newly discovered sexual harassment claim by filing her claims in federal court.”

The court also rejected the argument that Ding had necessarily waived her EFAA rights through her earlier participation in arbitration.

The majority acknowledged that EFAA rights may be waived under appropriate circumstances. But waiver ordinarily involves knowingly relinquishing a known right.

The court found insufficient evidence that Ding knew she possessed a viable sex-based harassment claim while she was pursuing her earlier claims in arbitration.

That makes the timeline particularly important.

For employees and their attorneys, what the employee knew, when the employee learned it, and when the sexual harassment dispute actually emerged may be critical to determining whether the EFAA can be invoked after arbitration has already begun.

Sex-Based Harassment Does Not Have to Be Sexual Conduct

The Ninth Circuit also addressed another important misconception about sexual harassment law.

Sex-based harassment does not necessarily require sexual advances, sexual touching, propositions, or explicitly sexual comments.
Harassment can be “because of sex” even when the conduct itself is not sexual.

In Ding's case, the majority concluded that her allegations were sufficient at the pleading stage to support a sex-based hostile work environment theory.

But there is an important distinction.

Not every discriminatory personnel decision, criticism, termination, or instance of different treatment automatically constitutes actionable workplace harassment. California law distinguishes between discrimination arising from personnel or management decisions and harassing conduct that contributes to a hostile work environment.

Whether particular conduct crosses that line depends on the facts.

The Dissent: Ding Already Made Her Choice

Judge Johnnie B. Rawlinson dissented.

The dissent took a very different view of the EFAA's election provision.

Judge Rawlinson emphasized that Congress referred to “the election” and argued that the statute contemplated a single choice between arbitration and litigation.

Under the dissent's reasoning, Ding's substantial participation in arbitration, including discovery, hearings, and stipulations, should have consequences. The dissent analogized the situation to cases in which a party's extensive participation in litigation can waive the right to later demand arbitration.

The dissent also pointed to legislative history describing the EFAA as providing employees with “a choice” between court and arbitration and expressed concern that the majority's interpretation allows that choice to be revisited after arbitration has already begun.

That disagreement is significant.

Ding is binding Ninth Circuit precedent unless and until it is modified through further appellate proceedings, but the 2-1 split highlights that the law surrounding the EFAA continues to develop.

What Ding Means for California Employees Who Signed Arbitration Agreements

The decision provides several important takeaways.

1. Signing an arbitration agreement does not necessarily mean a sexual harassment claim must be arbitrated.

When the EFAA applies, an employee alleging a qualifying sexual harassment or sexual assault dispute may be able to elect to pursue that dispute in court despite a predispute arbitration agreement.

2. Even starting arbitration may not necessarily eliminate that right.

That is the major development from Ding.

The Ninth Circuit rejected a categorical rule that merely beginning arbitration permanently eliminates the ability to later invoke the EFAA.

But Ding should not be read to mean that anyone can arbitrate a known sexual harassment claim for months or years and simply change forums whenever they want.

The majority's reasoning depended heavily on the fact that Ding allegedly did not know the facts supporting her sex-based harassment theory when she originally went to arbitration.

3. Evidence discovered during arbitration can matter.

Employment cases can evolve significantly during discovery.

Emails, text messages, internal communications, deposition testimony, and other evidence may reveal motivations or conduct that an employee did not know about while still employed.

Under Ding, newly discovered evidence supporting a qualifying sexual harassment dispute may affect whether an employee can invoke the EFAA.

4. What you knew—and when you knew it—can be critical.

The timing of discovery may become an important issue.

Employees and their attorneys should carefully document when facts supporting a potential sex-based harassment theory first became known.

5. Sexual harassment is not limited to sexual advances or comments.

Sex-based harassment can involve nonsexual conduct motivated by sex or gender. At the same time, discriminatory personnel decisions do not automatically become harassment simply because they involve sex discrimination. The distinction is fact-specific and legally significant.

6. California's arbitration-fee rules may provide a separate issue.

Ding initially withdrew from arbitration based on the employer's alleged failure to timely pay arbitration fees under California Code of Civil Procedure section 1281.98.

That issue is distinct from the EFAA. California employees in arbitration should have counsel separately evaluate whether an employer's handling of arbitration fees affects the enforceability or continuation of the arbitration.

Talk to a California Employment Attorney Before Assuming You Are Stuck in Arbitration

If your employer is telling you that an arbitration agreement prevents you from taking a sexual harassment claim to court, do not assume that signing the agreement ends the analysis.

And if you are already in arbitration and discovery has revealed evidence suggesting that workplace harassment was based on your sex or gender, the Ninth Circuit's decision in Ding makes it particularly important to evaluate your options promptly.

The employment team at our firm represents employees throughout California in sexual harassment, discrimination, retaliation, and wrongful termination matters, including disputes involving arbitration agreements and the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act.

If you believe you experienced workplace sexual harassment or sexual assault—or you have questions about whether an arbitration agreement prevents you from pursuing your claims in court, shoot me an e-mail at Emilia@antonyanmiranda.com for a free case evaluation.

Know your rights & Protect Yourself At All Times.