California: AB 51 Update – Mandatory Arbitration Agreements are Back In?
All Employers with CA Employees
January 31, 2020
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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 subject to the FAA 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.
- Review arbitration agreements with legal counsel in light of the recent development.
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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.
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