Hunton Employment & Labor Perspectives

Earlier today, Eastern District of California Judge Kimberly Mueller granted a preliminary injunction, prohibiting the state of California from enforcing AB 51, which sought to prohibit companies in California from requiring arbitration agreements as a condition of employment.

AB 51 originally was set to go into effect on January 1, 2020, but the Court granted a motion for temporary restraining order brought by a coalition of business groups, that temporarily prohibited the law’s enforcement through January 31, 2020.  In the interim, the Court considered more fulsome briefing and oral argument on the plaintiffs’ motion for preliminary injunction.

In a positive development for California employers, the Court made its temporary ruling more permanent by granting the plaintiffs’ motion for preliminary injunction. Specifically, the Court granted “plaintiffs’ motion for a preliminary injunction in full” and put in place the following injunction:

• Defendant Xavier Becerra, in his official capacity as the Attorney General of the State of California, Lilia Garcia Brower, in her official capacity as the Labor Commissioner of the State of California, Julia A. Su, in her official capacity as the Secretary of the California Labor and Workforce Development Agency, and Kevin Kish, in his official capacity as Director of the California Department of Fair Employment and Housing are:
  • Enjoined from enforcing sections 432.6(a), (b), and (c) of the California Labor Code where the alleged "waiver of any right, forum, or procedure" is the entry into an arbitration agreement covered by the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (“FAA”); and
  • Enjoined from enforcing section 12953 of the California Government Code where the alleged violation of “Section 432.6 of the Labor Code” is entering into an arbitration agreement covered by the FAA.
• There is no realistic likelihood of harm to defendants from preliminarily enjoining enforcement of AB 51, so no security bond is required. It is so ordered.

The Court did not expound on the rationale behind the Order, but noted it would subsequently issue a full written decision explaining its ruling.

You can read more about AB 51 here and here.