AB51 was set to take effect on Jan. 1, prohibiting employers from requiring, as a condition of employment, employees’ waiver of any right, forum, or procedure for a violation of any provision of the California Fair Employment and Housing Act or the Labor Code
Sacramento, Calif.—On Dec. 30, a Federal Court in Sacramento issued a Temporary Restraining Order (TRO) stopping California’s enforcement of AB51, it’s recently enacted anti-arbitration law.
AB51 was recently signed by Gov. Newsom and was set to take effect on Jan. 1, prohibiting employers from requiring, as a condition of employment, employees’ waiver of any right, forum, or procedure for a violation of any provision of the California Fair Employment and Housing Act or the Labor Code.
The U.S. Chamber of Commerce and other business groups filed a lawsuit seeking to invalidate AB51 on grounds that it is preempted by the Federal Arbitration Act. In issuing the TRO, the court found that the plaintiffs showed a “likelihood of irreparable injury” and that a restraining order is in the public interest. The court noted that, “plaintiffs have raised serious questions regarding whether the challenged statute is preempted by the Federal Arbitration Act as construed by the United States Supreme Court.”
The TRO will remain in place protecting the status quo until the Court issues its ruling following the Jan. 10, hearing on the plaintiffs’ Motion for Preliminary Injunction. With enforcement of AB51 restrained by a Federal Court, and potentially set to be enjoined or struck down all together, California employers who have not done so in the last few months are encouraged to consider updating their arbitration agreements.
The California Autobody Association’s employment counsel has prepared an updated arbitration agreement designed to withstand the challenges of recent court decisions. This agreement is available to current association members as a free member benefit.
Contact Cory King of FordHarrison LLP at 858-214-3951 or cking@fordharrison.com for further information and to obtain a copy of the new agreement.
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