Governor Brown rejected AB 465 on Sunday which would have instituted a blanket ban on mandatory arbitration agreements as a condition of employment. You can read more about the failed bill in our previous E-blast here. This bill comes as welcome news to employers facing an explosion of class action wage and hour litigation.

In rejecting the bill, Governor Brown’s open letter to the California State Assembly opined that the research on the fairness and utility of arbitration is still unclear and often contradictory. California courts have already tackled some issues of unfairness by requiring specific types of protection for employees to be required in the agreements. Based on this background of uncertainty Brown declared that he was unwilling to impose a blanket prohibition on employment arbitration agreements. Rather, he suggested, if abuses of these types of agreements still remain, they should be addressed by more targeted legislation. Additionally, Brown noted, as did many other commentators, that AB 465 likely violates the Federal Arbitration Act. Further, the U.S. Supreme Court is currently considering two cases arising out of California courts involving preemption of state arbitration policies under the FAA.

Counsel To Management:

While Brown’s rejection of AB 465 signals victory for employers in this particular battle, the war against arbitration still continues. It is certainly possible, and indeed likely, that the California Legislature will spawn additional legislation targeting specific provisions of arbitration agreements. Employers should make sure to keep up to date with new developments and restrictions in this arena to be certain that their arbitration agreements keep current with the most recent changes to the law. Please contact the Saqui Law Group with any questions regarding arbitration agreements and developments in this area of law.

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