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Federal Court Strikes Down California’s “Request Arbitration, Go to Jail” Law

On January 31, 2020, Chief United States District Judge Kimberly J. Mueller enjoined California from enforcing AB 51. This new legislation prohibits employers from requiring their employees to sign arbitration agreements.  Last week, the court issued its detailed written opinion explaining the basis for its decision.

As we predicted, the Court found that AB 51 is preempted by the Federal Arbitration Act (FAA) because it “singles out arbitration by placing uncommon barriers on employers who require contractual waivers of dispute resolution options that bear the defining features of arbitration.”  In short, AB 51 places arbitration agreements on “unequal footing” as compared to other contracts because AB 51’s prohibition on California employers’ use of “right, forum, or procedure” waivers as a condition of employment illegally disfavors arbitration agreements.

Plaintiffs (employer trade groups, including the Chamber of Commerce and the National Retail Federation) also demonstrated that they would face irreparable harm if the injunction were not granted because California businesses would either: (1) suffer criminal and civil penalties if they continued to rely on mandatory arbitration; or (2) be deterred from relying on mandatory arbitration, which is a right guaranteed them under the FAA.

Whether the state will appeal the district court’s ruling to the Ninth Circuit remains unclear.  In the meantime, employers in California may once again rest easy that they won’t be doing time in the county jail just for asking employees to sign an arbitration agreement.

© 2020 Proskauer Rose LLP.

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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....

310-284-5690
Kate Gold Labor and Employment Lawyer Proskauer
Partner

Kate Gold is a partner in the Labor & Employment Law Department in the Los Angeles office.

Kate has over 25 years of experience representing clients in a range of industries, across all areas of employment law.  An experienced litigator, she has represented clients in all types of employment-related suits, including class and collective actions, discrimination, retaliation and harassment, non-compete and wage/hour matters.  In addition to litigating, she conducts high-level workplace investigations and routinely counsels clients on matters involving the full range of state and federal employment issues.

Kate also represents clients in disputes involving  misappropriation of intellectual property and trade secrets, interference with contract, and unfair competition. Kate also counsels on classification of employees, employment issues in the context of purchase and sale of businesses, and non-competition agreements. Additionally, she negotiates and drafts executive employment and separation agreements and conducts training on sexual harassment prevention.

Kate received her B.A. and J.D. from the University of California, Berkeley.

+1.310.284.5623
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