As of this month, California employers are now allowed to resolve workplace employee complaints through mandatory arbitration–striking down the state’s previous law with a 2-1 ruling on February 15, 2023.
The 9th Circuit sided with employers in their ruling that the law conflicts with a federal arbitration statute. The development is largely seen as a legal win for big employers, with employees getting the short end of the stick with reduced protections.
Alleged victims of workplace harassment feel slighted by the decision, seeing as critics of mandatory arbitration believe it’s a tool for hiding wrongful acts, while business groups believe the FAA should override state laws against arbitration. The preliminary injunction blocking AB 51 will remain for the time being, until the State of California pursues an appeal.
As an employee in California, this can directly affect your ability to speak out about workplace harassment or settle complaints in a public forum.
What is Mandatory Arbitration?
Under a mandatory arbitration agreement, employees must settle harassment, discrimination, and other workplace complaints in private, confidential sessions instead of a public court proceeding.
Supporters of mandatory arbitration, which tend to be national and state business associations, believe these agreements result in quicker and less costly settlements to workplace matters while still protecting employees. However, critics see mandatory arbitration as an intentional tool to hide complaints and offenses, a callout to the #MeToo movement which touched on similar issues.
The Downfall of AB 51
AB 51, the law in question that was signed by Gov. Newsom in 2019, rendered employer-forced arbitration a criminal offense for claims under state labor laws.
In response, several business groups such as the U.S. Chamber of Commerce, California Chamber of Commerce, and the California Retailers Association have sued over AB 51 claiming it violates their rights to arbitration under federal law. In other words, they believe California law should be overridden by federal arbitration laws.
While AB 51 was initially blocked in 2019 by a federal district court judge who agreed with these business groups, the 9th Circuit panel reversed that ruling in 2021, before overturning it again this past month. The judge who broke the tie, William Fletcher, agreed that AB 51 shows “hostility towards arbitration that the FAA (Federal Arbitration Act) was enacted to overcome. “
What’s Next
Moving forward, the injunction blocking AB 51 will stay in effect for the time being. The State of California may request a rehearing from the 9th Circuit or appeal to the Supreme Court, and if a rehearing is granted, it will remain in effect until a decision is made.
However, if California doesn’t pursue an appeal, the case will return to the district court for a final determination.
The Impact
For supporters of arbitration, especially those outside of California, this decision is a notable victory.
With other states such as Illinois, New Jersey, Washington, and others pursuing their own state anti-arbitration laws, the 9th Circuit’s ruling further confirms that certain state laws are invalid and overridden by the FAA.
Only time will tell whether the injunction will be repealed and if the State of California decides to pursue a further appeal.
About Angela
Experienced Employment Law Attorney, Mediator, Arbitrator, Investigator, Legal, and Media Commentator
Twice-named a U.S. News Best Lawyer in America for employment and labor law, Angela Reddock-Wright is an employment and labor law attorney, mediator, arbitrator, and certified workplace and Title IX investigator (AWI-CH) in Los Angeles, CA. Known as the “Workplace Guru,” Angela is an influencer and leading authority on employment, workplace/HR, Title IX, hazing, and bullying issues. Furthermore, she’s been named a “Top 50 Woman Attorney” in California by Super Lawyers, a “Top California Employment Lawyer” by the Daily Journal, and one of Los Angeles’ “Most Influential Minority and Women Attorneys” by the Los Angeles Business Journal.
Angela is a regular legal and media commentator and analyst and has appeared on such media outlets as Good Morning America, Entertainment Tonight, Law and Crime with Brian Ross, Court TV, CNN, NewsNation, ABC News, CBS News, Fox 11 News, KTLA-5, the Black News Channel, Fox Soul – The Black Report, NPR, KPCC, Airtalk-89.3, KJLH Front Page with Dominique DiPrima, the New York Times, the Washington Post, the LA Times, Forbes.com, Yahoo! Entertainment, People Magazine, Essence Magazine, the Los Angeles Sentinel, LA Focus, Daily Journal, Our Weekly and the Wave Newspapers.
Angela is a member of the panel of distinguished mediators and arbitrators with Signature Resolution, a California dispute resolution company. She also owns her own dispute resolution law firm, the Reddock Law Group of Los Angeles, specializing in the mediation, arbitration, and investigation of employment discrimination, harassment, retaliation, and other workplace claims, along with Title IX, sexual harassment, assault, and misconduct conduct cases, along with hazing and bullying cases in K-12 schools, colleges, and universities, fraternities and sororities; fire, police and other public safety agencies and departments; and other private and public sector workplaces.
Be sure to follow me on Facebook and Instagram @iamangelareddockwright, LinkedIn at Linkedin.com/in/angelareddock, and tune in to my weekly radio show, KBLA Talk 1580’s Legal Lens with Angela Reddock-Wright each Saturday and Sunday at 11 am PST, or catch past episodes on Anchor.fm/Spotify. You can learn more about the radio show here – https://angelareddock-wright.com/radio-show/.
Also, learn more about my book – The Workplace Transformed: 7 Crucial Lessons from the Global Pandemic – here – https://angelareddock-wright.com/book/.
For media inquiries, please reach out to monty@kwsmdigital.com.
For more information regarding resources for employers, businesses, and employees during this time, connect with Angela on LinkedIn for new updates or contact her here. You may also follow her on Instagram.
This communication is not legal advice. It is educational only. For legal advice, consult with an experienced employment law attorney in your state or city.