New Law Prohibits Employers From Requiring Employees To Arbitrate

New Law Prohibits Employers From Requiring Employees To Arbitrate

On October 10, 2019, California Governor Gavin Newsom signed into law AB51 which drastically impacts the utilizing of arbitration agreements in the employment context.

AB51 adds Section 432.6 to the Labor Code and, when it becomes effective on January 1, 2020, the new law will prohibit employers from requiring employees to sign an arbitration agreement as a condition of employment.

It is unclear how this law squares with federal law that provides arbitration agreements are “valid, irrevocable and enforceable” and, in fact, the California’s new law provides that it is not “intended to invalidate a written agreement that is otherwise enforceable under the Federal Arbitration Act (9 U.S.C. § 2)”.  Importantly, the law allows for the enforcement of arbitration agreements entered into prior to January 1, 2020 so, if you have delayed having your employees execute arbitration agreements, a short window of time remains for you to require them to do so.

Should you need an arbitration agreement to address this situation, please contact Michael Oberbeck, at Burkhalter Kessler Clement & George, LLP

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