AB 51—Preempted, Or Not Preempted? That Remains The Question

Seyfarth Synopsis: A divided Ninth Circuit panel has held that employer attempts to impose mandatory arbitration agreements on applicants or employees can be criminally and civilly penalized in California, and thus struck down an injunction stopping California officials from enforcing AB 51. According to the panel's decision, businesses are once more barred from requiring workers to enter into agreements to arbitrate FEHA and Labor Code claims. Chamber of Commerce of the U.S. v. Bonta.

The Facts—AB 51

Signed into law by Governor Newsom on October 10, 2019, California Assembly Bill 51 subjects employers to criminal misdemeanor charges, as well as civil sanctions, for mandating arbitration agreements of certain claims in employment contracts. Under AB 51, which added Section 432.6 to the Labor Code, employees and job applicants cannot be contractually barred from suing employers in court for violations of the Fair Employment Housing Act or provisions of the Labor