Ninth Circuit Invalidates California’s Mandatory Arbitration Agreement Ban

March 09, 2023 | From HRCalifornia Extra

by Matthew J. Roberts; J.D.; Labor Law Helpline Manager, Employment Law Counsel/Subject Matter Expert, CalChamber

California’s proposed ban on mandatory arbitration agreements in the employment context — known commonly by its bill number, AB 51 — continued its odyssey through the court system when, on February 15, 2023, the Ninth Circuit Court of Appeals issued a decision invalidating the law (Chamber of Commerce of the United States of America, et al. v. Bonta, et al., No. 20-15291 (9th Cir., February 15, 2023)).

This decision is the latest in long-running litigation over whether California may prevent employers from requiring that their employees sign arbitration agreements as a condition of employment. In the decision, the Ninth Circuit found that the Federal Arbitration Act (FAA) preempts AB 51 because AB 51 criminalizes the formation of mandatory arbitration agreements and, thus, violates the FAA’s purpose of encouraging arbitration.

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