The Return Of The California Mandatory Arbitration Agreement

In a shocking win for California employers, the U.S. Court of Appeals for the Ninth Circuit held on February 15, 2023 that the Federal Arbitration Act (FAA) preempts California's controversial Assembly Bill 51 (AB 51), which attempted to criminalize employers' use of mandatory arbitration agreements in the Golden State.

AB 51's Goal of Criminalizing Legally Enforceable Mandatory Arbitration Agreements

Notwithstanding the FAA's long history of favoring arbitration nationally, California has engaged in a prolonged effort to bypass federal law and preclude California employers from requiring their employees to sign arbitration agreements as a condition of employment. After a similar measure was vetoed in 2015, California Governor Gavin Newsom signed AB 51 into law in October 2019, with an effective date of January 1, 2020.