Today, January 31, 2020,, United States District Court Judge Kimberly Mueller saved the use of arbitration agreements in employment by halting enforcement of Assembly Bill 51 (AB 51) - the legislature's latest attempt to limit these employment arbitration agreements.
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.
This case is ongoing, and a final order may reverse the injunction, which would then prohibit employment arbitration agreements except under very limited circumstances pursuant to AB-51. So, it would be better to get a good Dispute Resolution Plan now, while there is time before a final order.