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Federal Court Enjoins AB 51, California Law Barring Mandatory Employment Arbitration

On January 31, 2020, Judge Kimberly Mueller of the United States District Court in the Eastern District granted a preliminary injunction, which enjoins the state of California from enforcing AB 51.  Previously, on December 30, 2019, Judge Mueller granted a temporary restraining order enjoining the enforcement of AB 51 pending the Court’s ruling on the preliminary injunction.

AB 51 is a California anti-arbitration law signed by Governor Newsom on October 10, 2019 that was scheduled to go into effect on January 1, 2020.  The law prohibits employers from requiring that job applicants or workers sign arbitration agreements as a condition of their employment or continued employment.  AB 51 specifically states that it is not “intended to invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act.”

In Judge Mueller’s minute order, she indicated that “the court will explain its reasoning” for granting the preliminary injunction “in a detailed written order” in “the coming days.”  As a result of Judge Mueller’s order, California will not be able to enforce AB 51 while litigation on the enforceability of AB 51 continues.  Hill, Farrer, and Burrill will keep you apprised regarding the status of AB 51.