California’s Restrictions on Arbitration (AB 51) Will Not Be Enforced

Last October, Governor Newsom signed AB 51 into law when he obviously bowed to the relentless pressure from consumer attorneys to ban arbitration in California. While the law did not create an outright ban on arbitration agreements in the employment context, it did ban an employer’s right to insist upon only hiring individuals who agree to arbitration.
The problem? This new law was directly at odds with the Federal Arbitration Act and federal law preempts California law. In fact, federal judge Kimberly Mueller ruled almost immediately that a temporary restraining order should be placed on the enforcement of the new law. Then, after reviewing and considering the briefing and arguments from the lawyers, Judge Mueller put a preliminary injunction in place which further blocks the enforcement of the new law. An injunction is only granted when the judge believes that the law is likely to be ultimately thrown out. While there is no guaranteed result, it is more than likely that AB 51 will never be implemented and employers will remain free to insist upon arbitration as an efficient and effective means for resolving employment disputes. We’ll keep you posted.
Sometimes California employers get good news!