November 30, 2022

Volume XII, Number 334

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November 29, 2022

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November 28, 2022

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Employment Arbitration Agreements Remain Legal in California – At Least for Now!

As we previously reported here, in Chamber of Commerce of the U.S.A. v. Bonta, 13 F.4th 766 (9th Cir. 2021), a three-member panel of the Ninth Circuit Court of Appeals resurrected California Labor Code Section 432.6, which prohibited employers from requiring California employees to agree to arbitrate their employment-related disputes.

In a new twist, however, the same Ninth Circuit panel that upheld the law has now withdrawn and decided to reconsider that ruling.  While the panel reconsiders its ruling, California employers are free to require employees and applicants to sign arbitration agreements since a lower court previously struck down the anti-arbitration statute (signed by Gov. Gavin Newson in 2019) on the utterly predictable ground that it is preempted by the Federal Arbitration Act.

One unusual aspect of the panel’s decision to reconsider the Bonta decision is that no new decision has been issued to replace it.  Although a date has not been announced for a further hearing, the panel is expected to eventually issue a revised opinion.

Reading tea leaves, it would appear that Judge William A. Fletcher (who joined the original opinion written by Tenth Circuit Judge Carlos F. Lucero (sitting by designation)) may have changed his mind about the statute’s viability because, in this latest order, Judge Fletcher joined Judge Sandra S. Ikuta in deciding to withdraw the opinion so that it could be reconsidered.  Judge Ikuta wrote a fiery dissent to the original opinion that would have affirmed the lower court’s order striking down the statute.

A revised opinion could again alter the arbitration landscape in California, with a determination that employers must follow Section 432.6 (prohibiting arbitration agreements) or, alternatively, ruling that Section 432.6 is preempted by the Federal Arbitration Act and, therefore, unenforceable – or, maybe something in between those two possibilities!

Stay tuned…  We will continue to monitor developments regarding this issue.

© 2022 Proskauer Rose LLP. National Law Review, Volume XII, Number 239
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About this Author

Mark Theodore, Employment Attorney, Proskauer Rose
Partner

Mark Theodore is a partner in the Labor & Employment Law Department. He has devoted his practice almost exclusively to representing management in all aspects of traditional labor law matters throughout the U.S. 

Some highlights of his career include:

  • Successfully negotiated the first contract for a shipping agency during constant threat by union to shut down Port of Los Angeles

  • Successfully defended a major theme park when the NLRB sought bargaining order after the union...

310-284-5640
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....

310-284-5690
Associate

Wesley counsels clients in a wide range of labor and employment legal matters, including wage and hour issues, personnel policies and procedures, employee discipline matters, leaves of absence, WARN Act compliance, and labor and employment law issues that arise in corporate transactions. He also drafts and reviews employment agreements, independent contractor agreements, commission and bonus plans, separation agreements, and other documents related to the entire life cycle of the employment relationship.

Wesley has litigated a variety of...

310-284-4574
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