16 Dec Lawsuit Seeks to Prevent Enforcement of California’s Anti-Arbitration Law
On December 6, 2019, several business organizations filed a lawsuit in the U.S. District Court for the Eastern District of California challenging the legality of Assembly Bill No. 51. AB 51 generally prohibits employers from requiring applicants and employees to enter agreements that require the final and binding resolution of discrimination and wage-related claims by a private arbitrator. Under an existing provision of the Labor Code, an employer who violates AB 51’s prohibition against the mandatory arbitration of wage-related claims could be found guilty of a misdemeanor. AB 51 becomes effective on January 1, 2020. In the Complaint filed in Chamber of Commerce of the United States of America v. Becerra, the Plaintiffs seek a judicial declaration that AB 51 is preempted by the Federal Arbitration Act. A hearing on the Plaintiffs’ motion for a preliminary injunction is scheduled for January 10, 2020. A federal judge in June of this year held that a similar law in New York was preempted by the FAA and ordered that plaintiff’s sexual harassment claims to arbitration.