Seyfarth Synopsis: Set to
take effect on January 1, 2020, AB 51 would make it unlawful for
employers to impose arbitration agreements on employees as a
condition of employment, even if employees are permitted to opt
out. As expected, AB 51 was promptly challenged. The trial court
has just halted the law’s enforcement by the State of
California, pending resolution of a motion for preliminary
injunction.
As expected, AB 51 was challenged on grounds of
unconstitutionality and preemption by the Federal Arbitration Act.
The lawsuit, brought by the U.S. and California Chambers of
Commerce, as well as several trade organizations, sought
declaratory relief and a preliminary injunction to stop the
law’s enforcement with respect to arbitration agreements
governed by the FAA. On December 30, 2019, the trial court granted
the motion for a temporary restraining order—filed on
December 16, 2019—thereby temporarily barring the
State’s enforcement of AB 51.
