The 9th U.S. Circuit Court of Appeals recently confirmed that California employers can require job candidates and employees to sign arbitration agreements as a condition of employment.
The Feb. 15 ruling said the Federal Arbitration Act (FAA) takes precedence over California's law, AB 51, which prohibits employers from requiring workers to sign arbitration agreements.
"We agree with our sister circuits that the FAA pre-empts a state rule that discriminates against arbitration by discouraging or prohibiting the formation of an arbitration agreement," the court said.
Background
The U.S. Chamber of Commerce, the California Chamber of Commerce, the National Retail Federation, the California Retailers Association and the National Association of Security Companies were among the business groups that sued over the state law. They argued that AB 51 treats arbitration agreements differently from other contracts and conflicts with the purposes of the FAA. The state countered that AB 51 isn't pre-empted by the FAA and protects workers from being forced to waive their rights to a court trial.
A district court temporarily blocked the law from taking effect in 2020. The 9th Circuit originally upheld AB 51 in September 2021 but decided in August 2022 to reconsider that decision. The latest ruling continues the injunction against the law.
"The decision is great news for employers," said Spencer Skeen, an attorney with Ogletree Deakins in San Diego. "The decision clarifies things...
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