California employers can require employees to sign arbitration agreements after 9th Circuit ruling
HR leaders can once again require new hires to sign arbitration agreements as a condition of employment after a federal appeals court blocked a California law.
“This ruling is considered a big win for California employers,” Sarah Sepasi, managing attorney at Los Angeles-based law firm Sepasi Legal, P.C., told HRD.
“The Ninth Circuit’s ruling means that it’s still lawful for most employers in California to continue requiring employees to sign arbitration agreements. Certain considerations may limit this depending on the type of employer and industry, so it’s always recommended to consult with competent employment counsel to ensure your arbitration agreement is up to date.”
A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit has ruled that the Federal Arbitration Act (FAA) preempts Assembly Bill 51, signed by California Governor Gavin Newsom in 2019, which prohibits employers from requiring job applicants or employees to sign arbitration agreements.
“As the Ninth Circuit panel observed, AB 51 is the latest attempt by the California legislature to attack arbitration of employment disputes,” Rafael Nendel-Flores, a California-based labor and employment lawyer at international law firm Clark Hill, told HRD.
“In an effort to avoid FAA preemption, AB 51 attacked the formation of arbitration agreements rather than...
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