January 28, 2020

January 27, 2020

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California’s Arbitration Ban Challenged in Federal Court

As expected, California’s effort to ban employers from requiring employees and applicants to sign an arbitration agreement has been challenged in federal court.  The lawsuit was filed by a business coalition that includes the U.S. Chamber of Commerce and the National Retail Federation.

AB-51 was signed into law in October along with a constellation of other new laws targeting employers in the state. The bill prohibits “any person” from requiring an applicant or employee to “consent to the waiver of any right, forum, or procedure for a violation of the California Fair Employment and Housing Act or [the Labor] code.”  Any person violating this prohibition is subject to a misdemeanor.

Although the statute expressly states that the law does not intend to invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act (the “FAA”), it’s unclear how it could survive federal preemption in its current form.  The lawsuit that was filed on Friday seeks to invalidate the law on that basis. Former California Governor Jerry Brown vetoed similar bills on precisely that ground: they “plainly violate federal law.

While it may take some time for the lawsuit to work its way through the court, employers should keep an eye out here for any developments, as this case is likely to have far-reaching implications

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About this Author

Anthony J Oncidi, Employment Attorney, Proskauer Rose Law Firm
Partner

Anthony J. Oncidi heads the Labor & Employment Law Group in the Los Angeles office. Tony represents employers and management in all aspects of labor relations and employment law, including litigation and preventive counseling, wage and hour matters, including class actions, wrongful termination, employee discipline, Title VII and the California Fair Employment and Housing Act, executive employment contract disputes, sexual harassment training and investigations, workplace violence, drug testing and privacy issues, Sarbanes-Oxley claims and employee raiding and trade secret protection....

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Cole Lewis Employment Attorney
Associate

Cole Lewis is an associate in the Labor & Employment Department.

Cole graduated from UCLA School of Law, where he worked as a law clerk for Public Counsel of Los Angeles and advocated for benefit recipients in the Department of Public Social Services. He has also previously worked as a summer associate in Proskauer’s Labor & Employment Department.

Prior to law school, Cole received his Bachelor’s degree in Journalism at Indiana University, where he graduated cum laude.

310-284-5668