CHA News Article

Court Temporarily Blocks New Law Banning Employment Arbitration
For CEOs, in-house counsel, human resources executives

A new law banning pre-dispute employment arbitration agreements, set to take effect Jan. 1, has been temporarily blocked by a lawsuit challenging its validity.

The law — Assembly Bill 51 (Gonzalez, D-San Diego) — was signed in 2019 and prohibits employers from requiring employees to sign a pre-dispute arbitration agreement as a condition of employment or continued employment. It applies to any agreement entered into, modified, or extended on or after Jan. 1.

In December, a coalition led by CalChamber filed a lawsuit challenging the law. On Dec. 30, the court issued a temporary restraining order, prohibiting the attorney general, labor commissioner, Labor and Workforce Development Agency, and Department of Fair Employment and Housing from enforcing the law. The primary theory in the litigation is that AB 51 is pre-empted by the Federal Arbitration Act.

The court’s order will stay in effect until a Jan. 10 hearing on the request for a preliminary injunction. While this does not preclude a private lawsuit, it is good news as the first step in this legal challenge. 

CHA, as part of a coalition of large employers, supported the suit and will provide an update after the Jan. 10 ruling. Hospitals, particularly those that use pre-dispute arbitration agreements, should continue to monitor the case.

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