December 31, 2019

Court Blocks California Arbitration Ban

AB 51, barring mandatory arbitration agreements in employment, won’t go into effect in January after a federal judge granted a temporary restraining order (TRO) in a lawsuit alleging the law is preempted by the Federal Arbitration Act (FAA).

U.S. District Judge Kimberly Mueller wrote in her order that the lawsuit filed against the State of California by the U.S. Chamber of Commerce, California Chamber of Commerce, and several other business groups has “raised serious questions regarding whether [AB 51] is preempted by the Federal Arbitration Act as construed by the United States Supreme Court.”

AB 51 prohibits employers from requiring employees to sign mandatory arbitration agreements as a condition of employment regarding disputes under the California Fair Employment and Housing Act (FEHA) or the California Labor Code.

The TRO effectively halts the law’s enforcement by the State of California, pending resolution of a motion for a preliminary injunction to be heard on January 10. If granted, AB 51 will not be enforced while the preliminary injunction is in effect, and until the case is decided on the merits.  Employers, at least for now, may continue to utilize pre-employment arbitration agreements.

For more information, please contact Jason Resnick at (949) 885-2253