Though his predecessor previously vetoed similar bills, California Governor Gavin Newsom recently signed Assembly Bill 51 into law, effectively prohibiting the use of mandatory arbitration agreements for most employment law claims. The bill adds a new Section 432.6 to the Labor Code, prohibiting any person, including employers, from requiring an applicant or employee (as a condition of employment, continued employment, or the receipt of any employment-related benefit) to “waive any right, forum, or procedure” for alleged violations of the Fair Employment and Housing Act (FEHA) or the Labor Code. The text of the bill can be viewed here.
While the new law will likely face legal challenge as potentially preempted by the Federal Arbitration Act, California employers should review their employment and arbitration agreements and consider striking mandatory arbitration provisions, as violations of the new law could subject employers to criminal penalties and entitle employees who successfully challenge such violations to attorneys’ fees (this on top of the usual costs of litigation – both financial and non-financial).
This blog article is intended for general informational purposes only and should not be construed as legal advice or opinion. Contact myHRcounsel with questions concerning specific facts and circumstances.
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