Good news for California Employers: Mandatory Arbitration Agreements are Legal

The 9th Circuit Court of Appeals blocked Assembly Bill 51 (AB 51), which would have banned mandatory arbitration agreements in the workplace.  

Key Points of the Ruling:

1. AB 51 has been blocked in its entirety: The 9th Circuit found that all of AB51’s provisions work together, and declined to sever certain parts and uphold others. Despite the California Lawmakers’ attempts to word the Bill in a way that would avoid conflict with federal laws the bill was blocked. 

2. The U.S. Supreme Court ruled previously that state laws burdening the formation of arbitration agreements are at odds with the Federal Arbitration Act. The 9th Circuit agreed and found that AB 51 discriminates against arbitration by discouraging or prohibiting the formation of an arbitration agreement.

4. A permanent ban is likely: The 9th Circuit Court concluded that the business groups are likely to succeed on getting AB 51 permanently blocked.

5. The future of AB 51 and Mandatory Arbitration Agreements: While the 9th Circuit’s ruling only temporarily blocks AB 51, this is one of the latest indications that AB 51 will never see the light of day.

What Does this Mean for California Employers?

The 9th Circuit’s ruling means that it’s still lawful for employers to continue requiring employees to sign arbitration agreements in California. But it must be remembered that various considerations may limit this ability depending on the employer and industry.

It’s always best to have a conversation with expert Employment Attorneys to ensure your arbitration agreements and policies are up-to-date. If you do not have an arbitration agreement with your employees it’s extremely important to defend against class action lawsuits. Reach out to us at 760-DPA-0007 or for an arbitration agreement.