CHA News

State Files Appeal in Validity of AB 51

For CEOs, in-house counsel, human resources executives

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The state of California has filed an appeal to the Ninth Circuit in the case challenging the validity of Assembly Bill (AB) 51 (2019). AB 51 prohibits employers from requiring employees to sign a pre-dispute arbitration agreement as a condition of employment or continued employment. 

As previously reported, a U.S. District Court judge issued a preliminary injunction in January, blocking the state from enforcing the law.  

AB 51 applies to any agreement entered into, modified, or extended on or after Jan. 1. It was set to take effect Jan. 1 but was temporarily blocked by a lawsuit, led by the CalChamber, challenging its validity. As a result of the preliminary injunction, the state is enjoined from enforcing California Labor Code §§ 432.6(a), (b), and (c), where the alleged waiver of any right, forum, or procedure is the entry into an arbitration agreement covered by the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16.

The state is also enjoined from enforcing California Government Code § 12953, where the alleged violation of California Labor Code § 432.6 is entering into an arbitration agreement covered by the FAA. While the preliminary injunction is expressly limited to state enforcement, the recent rulings may deter private trial attorneys from filing civil litigation based on AB 51. 

The state filed its opening brief on May 29.  The plaintiffs’ response brief is due Aug. 14. Given the court’s schedule,  it is unlikely that a decision will be issued until early next year.   

CHA will keep members apprised of further developments with this new law.