New California law tackles mandatory employment arbitration

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Posted by Legal Team On November 8, 2019

Employers, if you have been using a forced arbitration clause as a condition of employment, you have some decisions to make. As of January 2020, California Assembly Bill 51 (AB 51) takes the teeth out of most of those old employment provisions.

Essentially, AB 51 prohibits employers from forcing employees to agree to mandatory arbitration. Under the new law, an arbitration provision cannot:

  • Require a mandatory arbitration agreement in order to obtain a job
  • Force an employee to agree to mandatory arbitration in order to remain employed
  • Force employees to waive their rights to bring legal claims as a condition of some work-related benefit (like a raise, promotion or desired transfer)

The new law will apply not only to all new employee agreements but also to any agreements that are “extended” past the first of the year — although there is some confusion about what constitutes an extended agreement and is, therefore, subject to the new rules.

Employees can still voluntarily make an arbitration agreement if they so choose — but they cannot be forced into it, and their employers cannot retaliate against them for exercising their rights under either the Fair Employment and Housing Act (FEHA) or the Labor Code.

Many employers may decide to simply scrap the agreements altogether. Employers who decide to leave their existing arbitration agreements in place may be faced with significant legal challenges since it remains to be seen exactly how the courts will interpret the concept of an “extended” employment agreement.

If you have questions about your rights in the workplace or believe that your employer has already violated your rights, find out more what laws protect you and how you can manage the situation.