California Federal Judge Issues Preliminary Injunction Against Enforcement of AB 51

A California federal judge has issued a preliminary injunction against a new state law that would prohibit employers from requiring workers to sign a mandatory arbitration provision as a condition of employment.  In Chamber of Commerce of the USA et al. v. Becerra et al., No. 2:19-cv-02456, a group of plaintiffs filed a complaint in the Eastern District of California asking the court to declare California’s AB 51 preempted by the Federal Arbitration Act.  As discussed in an earlier Disputing blog post:

AB 51 mandates that an “employer shall not threaten, retaliate or discriminate against, or terminate any applicant for employment or any employee because of the refusal to consent to the waiver of any right, forum, or procedure for a violation of the California Fair Employment and Housing Act or this code, including the right to file and pursue a civil action or a complaint with, or otherwise notify, any state agency, other public prosecutor, law enforcement agency, or any court or other governmental entity of any alleged violation.”  AB 51 “does not apply to a person registered with a self-regulatory organization as defined by the Securities Exchange Act of 1934 (15 U.S.C. Sec. 78c) or regulations adopted under that act pertaining to any requirement of a self-regulatory organization that a person arbitrate disputes that arise between the person and their employer or any other person as specified by the rules of the self-regulatory organization.”

According to the text of AB 51, the law is not “intended to invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act (9 U.S.C. Sec. 1 et seq.).” In 2018, however, a nearly identical bill, AB 3080, was vetoed by California’s previous governor due to the likely preemptive effect of the Federal Arbitration Act.

Although AB 51 was originally set to take effect on January 1st, Chief United States District Judge Kimberly Mueller issued a temporary restraining order barring its enforcement in late 2019.  In a 36-page order that was filed on Friday, Judge Mueller enjoined enforcement of the law and ruled “AB 51 is pre-empted by the FAA because it singles out arbitration by placing uncommon barriers on employers who require contractual waivers of dispute resolution options that bear the defining features of arbitration.”

The entire order in is available for viewing on the Courthouse News Service website.

Photo by: Bill Oxford on Unsplash