The ninth circle panel split 2-1 and found that the ban was not at odds with the FAA. The majority argued that the prohibition governs only conduct prior to the agreement and that AB 51 does not invalidate any arbitration agreement. In addition, the FAA`s purpose is not thwarted by AB 51, as the FAA deals with the enforcement of voluntary arbitration agreements, not binding agreements. However, the majority noted that criminal sanctions and civil liability are provided for (and therefore remain ordered) to the extent that they apply to enforced arbitration agreements. Contested at the Chamber of Commerce/. Bonta was AB 51, which prohibits employers from forcing employees to agree to settle claims under the California Fair Employment and Housing Act («FEHA») and the California Labor Code. In particular, AB 51 prohibits employers who «threaten, retaliate or discriminate against or dismiss a job applicant or employee because they refuse to consent to the waiver of any right, forum or procedure for violation of the [FEHA or the Labour Code], including the right to file and pursue a civil action or complaint, or otherwise any governmental authority, notify another prosecutor, law enforcement agency or court. Instead of invalidating the forced arbitration agreement, AB 51 subjects the employer to civil and criminal penalties. On January 15, 2019, the Supreme Court rendered its decision in New Prime Inc.c.
Oliveira, in which it ruled that independent truck drivers cannot be forced to arbitrate. The court`s decision is based on Article 1 of the Federal Arbitration Act, which exempts from coverage disputes relating to «employment contracts» with «employees engaged in foreign or interstate trade.» Read More SCOTUS exempts independent truck drivers from arbitration under the FAA However, all existing arbitration agreements between employees and employers remain valid under this new law.5 The Ninth District decision, which was heavily criticized in dissent, leaves a number of questions unanswered. For example, it is not clear whether certain enforcement actions against an employer for non-compliance with AB 51 may be permitted in certain situations, what remedies may be available to an employee who is dismissed for refusing to sign an arbitration agreement, whether all claims for damages in this context would be pre-empted if claims for the performance of AB 51 are anticipated. and whether the enforcement of a binding arbitration agreement could be avoided by demonstrating coercion. On the 18th. In March 2018, the New Jersey Anti-Discrimination Act (NJLAD) was amended to prohibit a possible waiver of substantive and procedural rights or remedies related to a complaint of discrimination, retaliation, or harassment, and that provisions of employment contracts that waive those rights are considered contrary to public policy and unenforceable. The new amendment further provides that «no person may retaliate, including, but not limited to, failure to hire, dismiss, suspend, demote, discriminate against a person, take the terms or privileges of employment, or other adverse measures against a person because the person does not enter into an agreement or contract containing a provision, which is considered contrary to public policy. » Read More Has New Jersey Just Tried to Ban Labor Arbitration Agreements? Arbitration agreements are subject to certain rules to be enforceable under California and federal law. If an arbitration agreement does not meet these requirements, it may be declared unenforceable.
This means that an employee cannot sue in court instead of being required to arbitrate under the contract agreement. First of all, what does this mean for the future of the AB 51? Finally, the District Court`s order was merely an injunction to maintain the status quo while fully clarifying the merits of the dispute. However, the Ninth District`s decision resolved legal issues that will definitively bind the District Court and likely bind the Ninth District for the rest of the dispute. This means that AB 51 (minus criminal penalties and civil liability in part) is likely to survive unless the entire Ninth District hears the case again or the Supreme Court agrees to take up the case. If the Supreme Court grants the certiorari, we will have another chapter in a long-standing dispute between the court and California over arbitration. .