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California Ban On Arbitration Agreements

It is estimated that 67 percent of California jobs had a binding arbitration policy above the national average in 2018, and that number may have increased this year as lawyers advised companies to be ahead of the new law. AB 51 added to the California Labor Code a new section that significantly limited the application of mandatory arbitration agreements in formal and informal employment contracts concluded on January 1, 2020 or after January 1, 2020. These are two important provisions that were included in state law, but opponents of the new law argue that arbitration agreements benefit both employers and workers. The Human Resources Management Corporation (SHRM) has asked Newsom to veto the law. SHRM supports public policy proposals that promote an accessible, timely and fair solution to harassment claims in the workplace, while protecting confidentiality and appropriate procedures. As we reported recently, a coalition of business groups led by the U.S. Chamber of Commerce filed a complaint earlier this month to prevent AB 51 from coming into force. The law, which came into effect in October, would make it illegal for California employers to require candidates and workers to sign arbitration agreements as of January 1, 2020. California employers have just been granted at the last minute compliance with a new law that prevents them from using binding arbitration agreements with their employees, at least for now.

It was only this morning that a federal court issued an injunction, which was requested by a coalition of business groups pushing for the new law before it could come into force on January 1. But the fight is just beginning, so California employers want to pay close attention to future developments to ensure they comply with current work-reconciliation law. Our lawyers in San Francisco are ready to protect your rights at Bracamontes and Vlasak. If you have any questions about arbitration in California, we can help. Contact our firm today for a free, completely confidential consultation. We deal with labor rights throughout the Bay Area, including San Francisco, Oakland, Berkeley, San Jose, Mountain View and Palo Alto.

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