In this installment of LaborSpeak, we discuss recent updates regarding California arbitration agreements.
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Transcript
Foreign employers can once again require employees to sign arbitration agreements as a condition of their employment on February 15 2023 a divided ninth circuit panel ruled the federal arbitration act for the FAA preempts to 2019 California law which prohibited employers from requiring job applicants or employees to resolve legal disputes for private arbitration rather than in court the FAA is a federal law allowing for private dispute resolution through arbitration California publicly noted that its 2019 law prohibiting arbitration for employment disputes was specifically drafted to avoid Federal preemption by focusing this new law on the formation of mandatory arbitration agreements and not on the enforceability of signed agreements however California's attempt ultimately failed when the ninth circuit ruled that the FAA preempts the state rule that limits or prevents parties from entering into arbitration agreements in the first place and that the law imposed a severe burden on contract formation California was the first state to at the time successfully ban mandatory arbitration of most employment related disputes before this New York New Jersey and Washington had tried to pass similar laws however these states went even further and attempted to restrict arbitration causes for all forms of workplace discrimination claims federal courts found those laws to be preempted by the FAA the ninth circuit decision striking down California's law was not a unanimous decision and there was still an Avenue for the bill to be restored California could ask the full ninth circuit or even the Supreme Court to review the panel's decision the dissenting judge specifically acknowledged that the Supreme Court has never held or implied that employers can require arbitration as a condition of employment employers should remember that as of March 2022 a federal law prohibits employers Nationwide for mandating pre-dispute arbitration agreements for sexual assault and harassment claims employers with arbitration agreements may want to confirm the status of any laws prohibiting such agreements in states where they have employees in addition to applicable federal law if you have questions about arbitration agreements or any other labor matters please reach out to a member of our labor and employment team