California cannot prohibit employers from requiring employees to sign arbitration agreements as a condition of employment, under a federal court order entered January 2, 2024. The permanent injunction came in a lawsuit from the U.S. Chamber of Commerce challenging a 2019 California law that effectively barred mandatory arbitration of employment disputes. The order from the U.S. District Court for the Eastern District of California essentially seals an agreement between the U.S. Chamber of Commerce and the state stipulating that the Federal Arbitration Act (FAA) preempts the state law (AB 51) and enjoining its enforcement. The district court’s order finalizes a preliminary ruling made last year by the U.S. Court of Appeals for the Ninth Circuit that the FAA preempts AB 51. The case is Chamber of Commerce v. Bonta, E.D. Cal. (order entered January 2, 2024).
Members of the Center for Workplace Compliance (CWC), our affiliated nonprofit membership association, can read more here.