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Employment Arbitration Lives On! Despite California Legislature's attempts to kill it. AB-51 is subject to preliminary injunction, prohibiting its enforcement.

Posted by Jon A. Dieringer | Jan 31, 2020 | 0 Comments

I am very pleased to announce that today, United States District Court Judge Kimberly Mueller halted enforcement of Assembly Bill 51 (AB 51)!!

AB 51 was a recently enacted law that would have prohibited employers from, as a condition of employment, entering into arbitration agreements for claims brought under the Fair Employment and Housing Act (like discrimination and harassment) and the Labor Code (like wage and hour claims).

A large coalition of employers led by the Chamber of Commerce challenged this new law, arguing that it conflicted with federal law. Judge Mueller granted the requested preliminary injunction after reviewing the briefing and hearing further argument.

Employment arbitration agreements that AB 51 attempted to ban have long been favored by employers and federal law. California courts and the legislature – led by fierce trial attorneys groups – have routinely tried to limit or ban the use of arbitration to resolve employment disputes. Those attempts have been routinely stricken down, and thankfully AB 51 is among that list.

Arbitration should be part of every good employer's Dispute Resolution Plan to avoid costly, lengthy and burdensome litigation and jury trials. It's a common sense Risk Management tool that is necessary in California's highly litigious environment.

For those of you who currently have arbitration agreements, Congratulations! But those agreements remain under attack and should be reviewed and perhaps updated by your legal counsel to comply with other recent requirements. It should have court-approved procedures and language. You do not want your right to quickly and cost-effectively arbitrate employment claims as an employer to be defeated by an aggressive attorney who claims your document is “unconscionable”.

For those of you who do not have arbitration agreements, Congratulations – you can still get a Dispute Resolution Plan that includes Arbitration for your workforce.

Contact us to see what we can do to help, and look forward to more developments in the changing employment law environment.

Thank you.

Jon Dieringer

PS: Language from Minute Order.

MINUTE ORDER issued by Courtroom Deputy C. Schultz for Chief District Judge Kimberly J. Mueller: On January 10, 2020, the court heard oral argument on plaintiffs' motion to preliminarily enjoin enforcement of California Assembly Bill 51 ("AB 51"). ECF No. 5 . At hearing, the court granted each party opportunity to file a supplemental brief addressing the issues of jurisdiction and severability. See ECF Nos. 37 , 40 . The court also ordered the temporary restraining order previously imposed, ECF No. 24 , remain in effect until January 31, 2020. Now, having carefully considered all relevant briefing, including supplemental briefing, the court GRANTS plaintiffs' motion for a preliminary injunction in full. In the coming days the court will explain its reasoning in a detailed, written order; however, as of this minute order, the following preliminary injunction shall take effect:

1. Defendant Xavier Becerra, in his official capacity as the Attorney General of the State of California, Lilia Garcia Brower, in her official capacity as the Labor Commissioner of the State of California, Julia A. Su, in her official capacity as the Secretary of the California Labor and Workforce Development Agency, and Kevin Kish, in his official capacity as Director of the California Department of Fair Employment and Housing are:

a. Enjoined from enforcing sections 432.6(a), (b), and (c) of the California Labor Code where the alleged "waiver of any right, forum, or procedure" is the entry into an arbitration agreement covered by the Federal Arbitration Act, 9 U.S.C. §§ 1-16 ("FAA"); and

b. Enjoined from enforcing section 12953 of the California Government Code where the alleged violation of "Section 432.6 of the Labor Code" is entering into an arbitration agreement covered by the FAA.

2. There is no realistic likelihood of harm to defendants from preliminarily enjoining enforcement of AB 51, so no security bond is required. It is so ordered.

Thank you,

Jon Dieringer

About the Author

Jon A. Dieringer

Jon believes in keeping a strong focus on preventive law; developing policies and practices to avoid costly disputes, and litigating only when required. Since the beginning of his law career in 1992, Jon has successfully litigated cases from intake through appeals, including discovery and deposit.

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