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The End of California’s AB 51?

This past week, the Ninth Circuit found that AB 51, a law that forbid California employers from requiring employees to enter into a mandatory arbitration agreements in the workplace, was preempted by the Federal Arbitration Act (“FAA”) — meaning that AB 51 is unenforceable. 

The Ninth Circuit Court ruled in Chamber of Commerce of the United States of America v. Bonata that AB 51 was preempted by the FAA because the FAA’s purpose is to further Congress’s policy of encouraging arbitration and AB 51 is an obstacle to Congress’ purpose.  As such, employers can mandate arbitration agreements in the workplace. While this is a benefit to CA employers, the court did recognize that mandatory arbitration agreement provisions may still be found to be unenforceable if the provisions are found to be procedurally or substantively unconscionable or otherwise unenforceable by general applicable contract rules.

While this is a win for employers, it is still extremely important that you understand the pros and cons of instituting an arbitration program in your workplace.  Business owners also know, if you already have an arbitration program in place, that you have your arbitration agreement reviewed by counsel to ensure compliance with applicable arbitration laws and enforceability. To learn more about arbitration agreements and how they impact your business, contact the Employer Lawyers at Chauvel & Glatt today. 

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.  For information on your particular circumstances, please contact  Chauvel & Glatt at 650-573-9500 for legal assistance near you. (photo credit: depositphotos.com).

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