There are three major recent developments that affect California workplace arbitration agreements. The first is the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021,” a federal law which prohibits employers from enforcing pre-dispute agreements that require arbitration of sexual assault and harassment claims. The second development is the U.S. Supreme Court’s June 15, 2022 decision in Viking River Cruises, Inc. v. Moriana which held that employers may compel individual arbitration of Private Attorneys General Act (PAGA) claims and preclude a group PAGA claim. Third, on August 22, 2022 the Ninth Circuit Court of Appeals reinstated the injunction prohibiting enforcement of AB 51, which means that as of the date of this blog post, California employers may require employees to sign compliant arbitration agreements.
In summary, what does this mean for California employers?
- Existing workplace arbitration agreements need to be updated immediately to comply with the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 and employers must properly follow the procedures set forth in that new law when an arbitration provision exists in a lawsuit involving claims of sexual assault or sexual harassment;
- For the first time, there is a court decision that expressly allows California employers to include PAGA claims in their arbitration agreements effectively eliminating the ability of a plaintiff to bring these claims on behalf of other employees — therefore, employers should immediately take advantage of this new court case and make sure PAGA claims are expressly included in arbitration agreements. However, it is possible this new development could change in the future due to anticipated decisions by the California Supreme or Appellate Courts, or by the California Legislature;
- AB 51 (which essentially prohibits mandatory workplace arbitration agreements in California) is not currently enforceable due to the reinstated injunction and so, for now, California employers may once again require that employees sign arbitration agreements as a condition of employment.
Both federal and California law regarding workplace arbitration agreements change frequently and likely will change again in the future.
We are long-time proponents of adopting workplace arbitration agreements with employees, and strongly encourage employers to consider working with our office or other qualified legal counsel to either adopt arbitration agreements for the first time or to update your current agreement so that it complies with California and federal law. There are a number of important options and considerations for employers regarding use of arbitration agreements in the workplace. Of course, laws regarding workplace arbitration agreements change frequently, particularly in California, so it is important to have workplace arbitration agreements reviewed at least annually for compliance.
The topic of California workplace arbitration agreements will be discussed in more detail during SHLC’s upcoming California Employment Law Update webinar on November 3, 2022. To register, please visit the Sutton Hague Events Page