After a month of uncertainty, a federal court judge has, for now, halted enforcement of California Assembly Bill 51 (“AB 51”), the bill that would broadly prohibit employers from requiring arbitration agreements as a condition of employment.
As previously reported, on December 30, 2019, a California federal judge issued a temporary restraining order delaying enforcement of AB 51. Intended to take effect on January 1, 2020, AB 51 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. Simply put, a plain reading of AB 51 would essentially eliminate an employer’s ability to require job applicants and employees to sign mandatory employment arbitration agreements.
We also reported that on January 10, 2020, the same federal judge ordered that the temporary restraining order would remain in effect until January 31, 2020, to give the litigants additional time to submit legal arguments as to whether a preliminary injunction should issue, which would continue to prevent the enforcement of AB 51 pending resolution of the lawsuit.
Most recently, on January 31, 2020, the federal court granted the plaintiffs’ request for a preliminary injunction. In so doing, the court ordered that California government officials are enjoined (i.e., prohibited) from enforcing AB 51 “where the alleged waiver of any right, forum, or procedure is the entry into an arbitration agreement covered by the Federal Arbitration Act.” The court stated that it would further explain its reasoning for granting the preliminary injunction in a detailed written order, to be entered “in the coming days.”
This federal court ruling appears to clear the way, at least temporarily, for California employers to continue to use mandatory employment arbitration agreements. However, whether AB 51 will ultimately be upheld or invalidated has yet to be decided, and it may be quite a long time—even years—before this question is answered with finality. Therefore, employers are advised to consult with qualified employment law counsel before proceeding with mandatory workplace arbitration agreements.
SHLC will continue to monitor this situation and post blog updates as new developments unfold.