California employers won an important victory this week in the fight to allow the use of mandatory employment arbitration agreements in California. See our December 13, 2019 article here on AB-51. In that article, we advised that the California Chamber of Commerce filed a lawsuit challenging AB-51 because it runs afoul of federal arbitration law.
On Monday, a federal court in California issued a temporary restraining order blocking AB-51 from taking effect on January 1, 2020. However, this week's order is only temporary. The court will hold another hearing on January 10, 2020 to decide whether the ban on AB-51 should stay in effect while the lawsuit proceeds. The court has already expressed that there are serious questions regarding whether the new law is preempted by the Federal Arbitration Act and that allowing the law to take effect would cause disruption in the making of employment contracts. It seems likely, therefore, that the current ban will stay in place, at least for the duration of the lawsuit.
We will continue to monitor this important case and provide further updates as the litigation develops. For now, AB-51 has no authority over California employers. Stay tuned for future E-Blasts from the employment law experts at the Saqui Law Group, a Division of Dowling Aaron Incorporated.