Way back on October 10, 2019, California Governor Newsom signed Assembly Bill 51 (“AB 51”), which essentially made it unlawful for California employers to require workers or job applicants to execute arbitration agreements requiring them to waive their rights to sue in court for violations of the California Fair Employment and Housing Act or the California Labor Code. Like many of the California legislature’s prior efforts to ban employment arbitration agreements, AB 51 was challenged prior to its effective date. This challenge was brought in the United States District Court for the Eastern District of California and resulted in the Court granting a motion enjoining its enforcement.
On September 15, 2021, the Ninth Circuit Court of Appeals reversed the District Court’s Order enjoining AB 51’s enforcement. While this ruling will almost certainly be appealed, at least for the time being the law is effective. This means that California employers are currently technically prohibited from requiring applicants or employees to execute arbitration agreements as a condition of employment. As such, California employers who intend to continue with those requirements should immediately consult with counsel to determine the benefits and risks of continuing down this (suddenly treacherous) path.
We will provide updates regarding AB 51 as further challenges to this law are all but guaranteed.