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The Battle of the Arbitration Agreement

Assembly Bill No. 51 (“bill”) was signed into law on October 10, 2019 and will go into effect on January 1, 2020. Specifically, the bill prohibits employers from requiring any applicant for employment or any employee to waive any right, forum, or procedure for a violation of any provision of the California Fair Employment and Housing Act or other specific statutes governing employment as a condition of employment, continued employment, or the receipt of any employment-related benefit. In other words, it bans mandatory arbitration agreements.

Notably, the bill introduces significant penalties and consequences for employer violations. For example, the bill amends the California Fair Employment and Housing Act to define an employer’s violation of the state Labor Code as an unlawful employment practice and allows plaintiff’s enforcing their rights under the bill to receive reasonable attorney’s fees for doing so. In addition, a violation of the bill will be deemed a misdemeanor pursuant to California Labor Code Section 433. Lastly, it is presumed that the bill will be enforceable through the Private Attorneys General Act (“PAGA”).

Despite the passing of this bill though, the bill will likely be challenged in Court and potentially “preempted” by the Federal Arbitration Act. Nevertheless, until the bill is challenged and/or preempted, employers should adjust their hiring practices accordingly.

For more information on this new law, how to ensure your policies, hiring documents and employment practices are California Labor Compliant, please contact the Employer Lawyers at Chauvel & Glatt.

This material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute, legal advice or promise similar outcomes.  For information on your particular circumstances, please contact Chauvel & Glatt at 650-573-9500.


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