Employment Arbitration Provisions

As most practitioners know, the trend of requiring employees to arbitrate with their employers, rather than going to court, has gone upwards for years…. until recently, as the pendulum as started to swing the other way. This trajectory reversal has been amplified by courts and legislatures alike.

In California, Assembly Bill 51 was passed last year and signed into law by Governor Newsom. Before the new law came into effect, several business organizations, like the U.S. Chamber of Commerce, filed litigation seeking an immediate injunction against the law. That request was granted by the US District Court in Sacramento, forcing the law into abeyance.

A couple weeks ago, the 9th Circuit US Court of Appeals vacated that injunction. It refuted the allegation that the law improperly infringed upon the Federal Arbitration Act, except for the law’s statutory civil and criminal punishments (up to 6 months in jail) which it felt were preempted.

“Congress was focused on the enforcement and validity of consensual written agreements to arbitrate and did not intend to preempt state laws requiring that agreements to arbitrate be voluntary,”

Based on this ruling, it is likely that more states will begin pass similar laws

For more, click here and click here.