Last Chance to Require Arbitration Agreement Before New Law is Effective.

Assembly Bill 51, signed into law by Governor Newsom on October 10, 2019, prohibits employers from requiring new or existing employees to sign agreements mandating arbitration of claims brought under the California Labor Code or the California Fair Employment and Housing Act (FEHA). In the past, virtually all employment arbitration agreements were designed and drafted to ensure that these very types of claims – on wage and hour laws and relating to discrimination and harassment – are subject to arbitration, rather than a lawsuit in the courts.

This new law prohibiting arbitration agreements goes into effect on January 1, 2020.

While the law is likely to face legal challenges and may even be invalidated, for now it will prevent employers from requiring employees to enter into most employment arbitration agreements as of January 1, 2020.

Arbitration agreements finalized before January 1, 2020, will probably remain valid. In our opinion, employers have a limited window of opportunity between now and 1/1/2020 to require their employees to sign arbitration agreements which include claims based upon the Labor Code and FEHA. While we cannot guarantee that such agreements will be upheld if executed, the change AB51 makes to existing laws will certainly make it much more difficult to arbitrate these claims if employers do not have an existing agreement.

Contact our office today to obtain an updated version of an employment Arbitration Agreement for your Company’s use before 1/1/2020. Thank you for your trust in us to meet your employment law needs. We appreciate your business!