Breaking News: California Employers Get Temporary Relief From AB 51’s Attempted Arbitration Ban

Employment Law

AB 51 was signed into law on October 10, 2019, and purported to outlaw the use of mandatory arbitration agreements in employment claims related to the Fair Employment and Housing Act or the Labor Code. You can read our previous article on AB 51 here. With the law set to take effect on January 1, 2020, the U.S. Chamber of Commerce and the California Chamber Commerce, along with other named organizational plaintiffs, filed suit on December 9 in the U.S. District Court for the Eastern District of California for declaratory and injunctive relief, seeking to enjoin the enforcement of AB 51. See Chamber of Commerce of U.S. v. Xavier Becerra, et al., Case No. 19-cv-02456-KJM-DB, Dckt. No. 1, E.D. Cal. Dec. 9, 2019.

Yesterday, on the eve of implementation—following the plaintiff’s motion for a temporary restraining order (TRO) on December 16, 2019—U.S. District Judge Kimberly J. Mueller issued an order granting the TRO pending resolution of the plaintiffs’ preliminary injunction motion. The preliminary injunction hearing is set for January 10, 2020. In granting the TRO, the court enjoined and prohibited the state of California and its agencies from enforcing any provision of AB 51. Judge Mueller concluded that the plaintiffs had “raised serious questions” regarding whether the statute is preempted by the Federal Arbitration Act, and that the “making of employment contracts” would be disrupted by even a brief implementation of the law.

Manatt will continue to monitor developments surrounding AB 51.