In 2019 the Legislature made it a crime to require employees to agree to settle disputes outside of court. But last week a U.S. appeals court ruled that California’s mandate conflicted with federal law and employers are still allowed to pursue such arbitration agreements.
CalChamber President and CEO Jennifer Barrera hailed the decision, arguing that “arbitration remains an efficient, cost-effective way to resolve disputes in a timely and fair manner.” Congress has set a policy of encouraging arbitration.
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A large coalition of business groups has been challenging the legislation, AB 51, since Gov. Newsom signed it into law. Then-Asm. Lorena Gonzalez, known for her ag overtime bill, drafted AB 51 and later left the Legislature to lead one of California’s most powerful labor organizations. Former Gov. Jerry Brown vetoed a similar measure the prior year.
With the ruling, Western Growers is advising members to consult with lawyers before drafting agreements, since small errors can still invalidate them.
