For years, the Federal Arbitration Act (FAA) has provided a mechanism for California employers to enforce arbitration agreements despite the state’s repeated efforts to narrow them. However, a newly signed law will change that. On June 30, 2026, Governor Gavin Newsom signed Assembly Bill 2155 (Chapter 46, Statutes of 2026), which amends Code of Civil Procedure section 1281 so that an arbitration agreement is unenforceable under the California Arbitration Act (CAA) “to the extent” it would be unenforceable under the FAA. The measure takes effect January 1, 2027.
The bill is only a few lines long, but its effects are significant. Beginning January 1, 2027, if an arbitration agreement falls outside the FAA because of one of the Act's exclusions, employers should no longer expect to be able to compel arbitration under the CAA instead. Rather than fighting federal arbitration law, California has imported the FAA's carve-outs directly into state law.
Before this amendment, section 1281 recognized written arbitration agreements as “valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” AB 2155 leaves that language in place but adds a new subdivision (b):
Notwithstanding subdivision (a), a written agreement to submit to arbitration is not enforceable under this section to the extent the agreement is not enforceable under the Federal Arbitration Act (9 U.S.C. Sec. 1 et seq.).
The bill’s findings make the...
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