Our last update included a summary on AB 51, the California bill that addresses the use of arbitration agreements in employment settings. While Governor Newsom signed AB 51 into law on October 10, 2019, a federal court issued a temporary restraining order, prohibiting the bill’s enforcement, that was to remain in place until January 31, 2020. In Chamber of Commerce of the United States of America v. Becerra, the Court permitted the parties to file supplemental briefs on January 17 and 24, 2020. On February 7, 2020, the federal court granted a motion for preliminary injunction on the basis that the plaintiffs “met their burden of showing they are likely to succeed on the merits of their claim that AB 51 is preempted” by the FAA (Federal Arbitration Act) because AB 51 discriminates against arbitration and interferes with the FAA’s objectives. The Chamber argued that AB 51 will cause immediate harm to the employment market for employers in California who rely upon arbitration as a mechanism to “anticipate lower legal costs and more efficient dispute resolution procedures.” These employers will likely either risk criminal or civil penalties by continuing to enforce arbitration agreements as a condition of employment, or incur costs to redraft employment agreements and be unable to realize the cost and efficiency of arbitration in the employment setting. We will continue to track this case and others working their way through the courts with challenges to AB 51. In light of the injunction, employers are still permitted to require employees to sign an arbitration agreement at this time. If you do not have an arbitration agreement in place, please contact Hunt Ortmann for assistance.
JoLynn M. Scharrer is a shareholder at Hunt Ortmann and leads the firm’s Employment Law Group. Our team is ready to guide you with handling your employment matters. Please contact us at: firstname.lastname@example.org.