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California Ban on Mandatory Arbitration Agreements Enjoined
Jan 31, 2020

California Ban on Mandatory Arbitration Agreements Enjoined

Topics: Arbitration Agreements, Court Decisions

As California employers know, the California legislature passed a new law in 2019 barring employers from requiring employees to enter into arbitration agreements that cover wage and hour claims and FEHA claims (discrimination, harassment, retaliation). That law was supposed to take effect January 1, 2020 and would have applied to arbitration agreements entered into after that date. Enter helpful litigation.

Business groups led by the California Chamber of Commerce filed a lawsuit seeking to enjoin the state from enforcing the new law, arguing that it is preempted by the Federal Arbitration Act (FAA). In late December, a judge of the Eastern District (Judge Mueller) temporarily enjoined enforcement of the new law as to agreements governed by the FAA.  After considering further briefing, the court has now granted a longer injunction against the law, which will be in place until the litigation is resolved on the merits.

California employers should continue to monitor this litigation as its ultimate outcome will impact the continued validity of mandatory employment arbitration agreements in the Golden State. For now, these agreements are still permissible for agreements governed by the FAA and most employers will stay the course with broad-based employment arbitration agreements.

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For over 25 years, CDF has distinguished itself as one of the top employment, labor and immigration firms in California, representing employers in single-plaintiff and class action lawsuits and advising employers on related legal compliance and risk avoidance. We cover the state, with five locations from Sacramento to San Diego.

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About the Editor

Robin Largent has a regular presence in California state and federal courts and has been lead defense counsel and appellate counsel for large and small California employers in litigation (and arbitration) ranging from individual discrimination and harassment claims to complex wage and hour representative and class actions. She also leads the firm’s appellate practice, having substantial experience and success handling appeals, writ petitions, and amicus briefs in both state and federal court on issues such as class certification (particularly in the wage and hour arena), manageability and due process concerns associated with class action trials, exempt/non-exempt misclassification issues, meal and rest break compliance, trade secret/unfair competition matters, and the scope of federal court jurisdiction under the Class Action Fairness Act.
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