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The Mandatory Arbitration Agreement Saga Continues!

Since the Supreme Court’s 2018 decision in Epic Systems Corp v. Lewis acknowledging that the Federal Arbitration Act (“FAA”) permits the use of arbitration agreements with class action waivers, many employers have implemented, or continued, arbitration agreements for their employees.

In response to the Epic Systems decision, California passed AB 51 in 2019 that prohibits employers from imposing as a condition of employment (or continued employment) mandatory arbitration agreements. AB 51 was subsequently challenged and shortly before it was set to take effect, a temporary restraining order was granted and subsequently a preliminary injunction was issued barring enforcement of AB 51.

Almost a year later, the Ninth Circuit, has opened the door for AB 51 to go into effect by reversing this central issue in United States Chamber of Commerce v. Bonta, inwhich the preliminary injunction was granted based on the district court’s decision concluding that the argument that AB 51 is preempted by the FAA was likely to prevail.  However, the Ninth Circuit held that AB 51 was not preempted by the FAA because it was solely concerned with pre-agreement employer behavior. 

The split suggests that business groups may likely seek review by the US Supreme Court. This is a case to keep an eye on as this will impact employer arbitration agreement agreements and their enforceability with their employees. Additionally, as we near 2022, changes to arbitration fee requirements may impact an employers decision to continue to offer arbitration agreements. To learn more about how this affects the use of arbitration agreement with your employees, whether an arbitration agreement with your employees is a good choice for your company, or how to draft an enforceable agreement, contact the Employer Lawyers at Chauvel & Glatt.

The material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information The 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. (photo credit: depositphotos.com)


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