California Law Revived: Ninth Circuit Partially Upholds Ban on Mandatory Arbitration
In 2019, California Governor Newsom signed bill AB-51 into law. The new law effectively allowed employees to bring employment-related claims to court instead of mandated arbitration. One year later, when certain business groups attempted to challenge the law, U.S. District Judge Kimberly J. Mueller issued a preliminary injunction against enforcing the law. She held that the new law could be viewed as attempting to circumvent the Federal Arbitration Act (FAA), which would be impermissible under federal law. In September 2021, a lawsuit against the State of California culminated with a divided panel of three judges of the Ninth Circuit Court of Appeals. While the Court found some portions of the bill to conflict with the FAA, the judges lifted the injunction, largely disagreeing with the lower court that executing employer-employee arbitration agreements went against the FAA. While many questions still remain (and more litigation over this issue is expected), this ruling has been viewed as a positive step in the fight to end forced arbitration in the workplace.