September 24, 2021
Authored by: Christopher Archibald
On October 10, 2019, Governor Gavin Newsom signed into law California Assembly Bill 51 (“AB 51”), with an effective date of January 1, 2020. AB 51 prohibits an employer, as a condition of employment, from requiring an employee to sign an arbitration agreement. The prohibition applies even if the employer provides the employee with the opportunity to opt-out of the agreement to arbitrate. However, AB 51 also provides that it does not invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act (“FAA”). Any person who violates AB 51 is guilty of a misdemeanor, punishable by imprisonment in a county jail, not exceeding six months, or by a fine not exceeding one thousand dollars ($1,000), or both. Violation of AB 51 also exposes an employer to investigation by the Department of Fair Employment and Housing (“DFEH”) and potential civil litigation brought either by the DFEH on behalf of an aggrieved individual or, if the DFEH declines to initiate litigation, by the individual in a private suit.
On December 9, 2019, the Chamber of Commerce of the United States and other business groups filed a complaint for declaratory and injunctive relief in the United States District Court