Applies to: All Employers with CA Employees
Effective: January 31, 2020
As of January 1, 2020, AB 51 prohibited employers from requiring job applicants and employees to enter into arbitration agreements. However, on December 30, 2019, a federal district court issued a temporary restraining order preventing the state from enforcing the bill while a request for preliminary injunction was reviewed. After extensive legal argument, on January 31, 2020, the court issued a preliminary injunction with respect to arbitration agreements covered by the Federal Arbitration Act (FAA), preventing the bill from going into effect while its legality is resolved in court. On February 10, 2020, the court issued its ruling supporting the preliminary injunction. Employers with arbitration agreements that are not covered by the FAA (e.g., agreements with interstate truckers) are still subject to the terms of AB 51.
The legal community appears to uniformly indicate that this development means that employers can continue to use mandatory arbitration agreements until further development in the federal court case challenging the bill. However, employers are recommended to consult with legal counsel on the best course of action before determining next steps.
Action Items
- Review arbitration agreements with legal counsel in light of the recent development.
- Subscribers can call our HR Hotline at (833) 268-5531 or send an email to hrsolved@onedigital.com for further assistance.
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