CA AB51 Bans Mandatory Employment Arbitration
December 13, 2019
On October 10, 2019, Governor Gavin Newsom signed Assembly Bill 51 (AB51) into law, which prohibits employers from (a) conditioning employment, continued employment or the receipt of any employment benefit on the applicant or employee waiving rights under California’s Fair Employment and Housing Act (FEHA) or the California Labor Code or (b) threatening, retaliating or discriminating against, or terminating the applicant or employee for refusing to waive employment-relate rights. Notably, AB51 explicitly carves out any written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act (FAA). The new law will become effective on January 1, 2020.
Although some practitioners believe that AB51 will likely be challenged in court, companies in California should consult with counsel about their options. For example, existing arbitration agreements may be amended to affirmatively provide that the agreement is covered and governed solely by the FAA. Employment agreements entered into, modified, or extended on or after January 1, 2020 must comply with AB51.
Although some practitioners believe that AB51 will likely be challenged in court, companies in California should consult with counsel about their options. For example, existing arbitration agreements may be amended to affirmatively provide that the agreement is covered and governed solely by the FAA. Employment agreements entered into, modified, or extended on or after January 1, 2020 must comply with AB51.