A late Christmas gift for California employers arrived on December 30, 2019, when U.S. District Judge Kimberly Mueller granted a temporary restraining order against one of Governor Newsom's most controversial new laws (AB 51) which forbids California employers from entering into arbitration agreements with most employees. As a result, the new law will
go into effect on January 1, 2020 as originally planned.
Signed into law this past October, AB 51 prohibits employers from requiring employees or applicants for employment to sign an agreement requiring the applicant or employee to arbitrate claims for violations of the Fair Employment and Housing Act or the Labor Code. Under the law, employers may not condition employment or continued employment on the applicant or employee agreeing to arbitrate such claims, or exchange employment-related benefits for an arbitration agreement. Any violation of the law qualifies as a misdemeanor and attorney's fees are available to plaintiffs.
AB 51 threatens to upend the employment landscape as the vast majority of California statutory claims are brought by employees under the Fair Employment and Housing Act or the Labor Code, and are thus covered by the law.
Judge Kimberly Mueller granted the temporary restraining order against AB 51 on the grounds that there are serious questions about whether the law is preempted by the Federal Arbitration Act.
While this is a positive development for California employers, the fight is not close to being over as a hearing on a preliminary injunction is set for January 10, 2020. If the law's challengers prevail at the preliminary injunction hearing, then AB 51 will remain unenforceable until the litigation is concluded.
If you have any questions about the matters discussed in this issue of Compliance Matters, please call your firm contact at 818-508-3700 or visit us online at
Richard S. Rosenberg
Katherine A. Hren
Ballard Rosenberg Golper & Savitt, LLP