In October of 2019, California Governor Gavin Newsom signed Assembly Bill 51 (AB 51) into law.  AB 51 states that”[a] person shall not, as a condition of employment, continued employment, or the receipt of any employment-related benefit, require any applicant for employment or any employee to waive any right, forum, or procedure for a violation of any provision of the California Fair Employment and Housing Act… or [the Labor] code.”  In effect, the law prohibits employers from retaliating against workers who decline to sign arbitration pacts as a condition of employment.

AB 51 was initially set to become law on January 1st, 2020.  However, in December 2019, the California Chamber of Commerce, along with a number of other business interest groups, were successful in obtaining a temporary restraining order barring AB 51 from going into effect.  On February 6th, 2020, a District Court judge enjoined the law, ruling that the business interest groups were more likely than not to prevail on their claim that AB 51 is preempted by the Federal Arbitration Act (“FAA”).

On September 15, 2021, the Ninth Circuit lifted the injunction.  The Court reasoned that because the FAA does not require “parties to arbitrate when but one party desires to do so,” the anti-retaliation provisions of AB 51 are not preempted by the FAA.  However, the Court did go on to hold that those sections of AB 51 providing for civil sanctions and criminal penalties that would allow an employer to be incarcerated for up to 6 months for violating the law shouldn’t be enforced and would be preempted by the FAA.

The business groups opposing AB 51 are unlikely to drop their challenges to the law, and we can expect further litigation.  In the meantime, this is a significant victory for California employees, who, at least for now, cannot be forced to sign arbitration agreements as a condition of employment.