California Federal Court Blocks AB 51, Thus Allowing Mandatory Arbitration Agreements Federal law supports the arbitration of disputes, including employment claims. In another attempted end run around federal law, the California Legislature passed AB 51, which prohibited companies from requiring that employees sign an agreement that mandates arbitration of disputes. AB 51 allowed companies to request that employees sign an Arbitration Agreement, but did not allow companies to require it as a condition of employment. Although the Legislature stated that this law was “not intended to invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act,” it is clear that the goal was to severely interfere with the overriding federal policies in favor of enforcing arbitration agreements. The US and California Chambers of Commerce, along with a coalition of employer groups, filed a lawsuit to stop AB 51 from taking effect. Just before the end of the year, the Court issued a Temporary Restraining Order, which stopped implementation temporarily, until further evidence and briefs could be submitted. This past Friday, January 31, 2020, the Court issued a Preliminary Injunction – the next level court order – which stops AB 51 from taking effect indefinitely. This Preliminary Injunction does not mean that the battle is over, but it does mean that the Court has determined that the Moving Parties – the US and California Chambers of Commerce, and employer groups – have already demonstrated a likelihood of success. So for now, and the foreseeable future, AB 51 is blocked and otherwise lawful arbitration agreements remain enforceable. Notably, this means that a properly-drafted class action waiver that is part of an enforceable arbitration agreement continues to be an important and powerful weapon in an employer’s arsenal against class action lawsuits. For any questions regarding mandatory harassment training, please contact Scott & Whitehead at (949) 222-0166 or contact the EAC office at (714) 794-4253. |
| |
