The U.S. Court of Appeals for the Ninth Circuit affirmed the district court’s grant of a preliminary injunction barring enforcement of California’s Assembly Bill (AB) 51 with respect to arbitration agreements governed by the Federal Arbitration Act (FAA). Chamber of Commerce of the U.S., et al. v. Bonta, et al., No. 20-15291 (9th Cir. Feb. 15, 2023).
AB 51 seeks to impose criminal and civil penalties on employers that require individuals to sign, as a condition of employment or employment-related benefits, arbitration agreements affecting rights under the California Fair Employment and Housing Act or Labor Code. A majority of the Ninth Circuit panel concluded the FAA preempts AB 51.
Under AB 51, employers are prohibited from requiring individuals to sign as a condition of employment or employment-related benefits arbitration agreements concerning disputes arising under the California Fair Employment and Housing Act or Labor Code. AB 51 purports to apply to any arbitration agreement entered into, modified, or extended on or after January 1, 2020.
As AB 51 took effect in early 2020, a California federal district court granted the U.S. Chamber of Commerce’s request for a preliminary injunction, enjoining enforcement of AB 51 with respect to arbitration agreements governed by the FAA. The State of California appealed the preliminary injunction to the Ninth Circuit.
In 2021, a divided Ninth Circuit panel held the FAA does not completely preempt AB 51. Chamber of...
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