In a major victory for California employers, the Ninth Circuit
Court of Appeals struck down California Labor Code Section 432.6,
which not only bars the use of mandatory arbitration agreements in
the workplace as a condition of one's employment, but could
also lead to the imposition of civil and criminal penalties against
California employers.
California passed AB 51 in 2019, codified at Labor Code section
432.6, to take effect January 1, 2020. In addition to prohibiting
mandatory arbitration agreements for job applicants and employees,
AB 51 provided a new private right of action for individuals to sue
California employers who retaliated against them for refusing to
sign such agreements. In a 2021 ruling, the Ninth Circuit partially
upheld AB 51 by eliminating the civil and criminal penalty
component, but otherwise leaving AB 51 in effect. Last year, the
Ninth Circuit, on its own, withdrew its 2021 ruling to rehear the
case.
