Over the past four years, we have discussed AB 51, the 2019 bill that attempted to prevent mandatory arbitration of FEHA and Labor Code claims in California as of January 1, 2020, for any contracts for employment entered into, modified, or extended after that date. We have also written relentlessly about the litigation ping-pong as AB 51 worked its way through the federal court system. You can see a few of our prior articles here, here and here.
Thankfully, we have reached the end of the AB 51 saga. On January 1, 2024, in Chamber of Commerce of the USA v. Becerra, a federal district court put the final nail in the coffin by entering a permanent injunction barring the State of California from enforcing AB 51. This decision bolsters an earlier 2023 Ninth Circuit decision affirming that AB 51 is entirely preempted by the Federal Arbitration Act (“FAA”) because it discriminates against the formation of mandatory arbitration agreements.
Specifically, the district court injunction bars the enforcement of:
No further appeal by the State of California is expected, and this permanent injunction is expected to be the final decision on AB 51.
This decision means that employers now can safely require applicants and existing employees to sign mandatory arbitration agreements as a condition of hire or continued employment. If you have not already done so, be sure to update your arbitration agreements and your employment application, offer letters, employment agreements and other similar documents to reflect these good tidings.
For questions regarding arbitration agreements or to request assistance with revising offer letters, employment agreements and arbitration agreements, contact the employment attorneys at LightGabler.
For questions regarding arbitration agreements or assistance with revising employment agreements, offer letters and arbitration agreements, contact the attorneys at LightGabler.
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