Federal Court Delays Enforcement of New California Law Prohibiting Mandatory Employment Arbitration Agreements

By SHLC on December 30, 2019 in Uncategorized

In an October 2019 blog post, SHLC discussed the passage of California Assembly Bill 51 (“AB 51”), which was intended to take effect on January 1, 2020. The bill broadly prohibits California employers from requiring a job applicant or employee, as a condition of employment, continued employment, or receipt of any job-related benefit, to “waive any right, forum, or procedure” for redressing a violation of any provision of the California Fair Employment and Housing Act or California Labor Code. In the blog post we noted that AB 51  likely would be subject to legal challenge on the basis of the Federal Arbitration Act.

On December 30, 2019, a federal judge in the United States District Court for the Eastern District of California issued a temporary restraining order, which prohibits California government officials from enforcing the law until at least January 10, 2020. At that time, the court will hold a hearing to decide whether it should issue a preliminary injunction, which may further delay the enforcement of AB 51.

In granting the temporary restraining order, the court found there are “serious questions regarding whether the challenged statute is preempted by the Federal Arbitration Act as construed by the United States Supreme Court.”

This court decision provides some temporary relief to employers, who now have until at least January 10 (as opposed to January 1) before AB 51 will become enforceable. Employers should watch this case closely, however, because if a preliminary injunction is not issued, the law may then take immediate effect. SHLC will continue to monitor this situation and post blog updates as new developments unfold.

To read the court’s full order, click here.

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