U.S. Ninth Circuit Court of Appeals Upholds AB 51 Barring Arbitration Provisions in Employment Contracts

Today, the Ninth Circuit upheld California’s new law (AB 51) barring arbitration provisions in employment contracts. The U.S. Chamber of Commerce and other organizations challenged the law in federal court. The district court enjoined the law, ruling that it conflicts with the Federal Arbitration Act.

A divided Ninth Circuit panel reversed. Judge Lucero, a Tenth Circuit judge sitting by designation, wrote the majority opinion (joined by Judge Fletcher). Judge Ikuta dissented.

Once the court’s mandate issues, the district court’s injunction will dissolve. The mandate will issue in about 21 days, unless a party files a petition for rehearing or asks for a stay of the mandate pending the filing of a petition for writ of certiorari to the Supreme Court.

Whatever option the plaintiffs pursue, it’s unlikely that the 3-judge Ninth Circuit panel will have the last word. 

If the decision stands, businesses with employees in California will need to take a close look at their employment policies and standard contracts to ensure compliance with AB 51.

For more information about this decision and AB 51, please contact James Azadian (jazadian@dykema.com, or 213-457-1779), Cory Webster (cwebster@dykema.com, or 213-457-1745), Laura Worsinger (lworsinger@dykema.com or 213-457-1744), Allison Scott (ascott@dykema.com or 213-457-1728), or your Dykema relationship attorney.