Can Your Employer Require You To Sign An Arbitration Agreement As A Condition Of Employment In California?

California Governor Gavin Newsom signed into law California Assembly Bill 51, (“AB 51”), on October 10, 2019. Section 1 of AB 51 declares that “it is the policy of this state to ensure that all persons have the full benefit of the rights, forums, and procedures established in the California Fair Employment and Housing Act … and the Labor Code.”

Pursuant to this policy, AB 51 was enacted with the “purpose of … ensur[ing] that individuals are not retaliated against for refusing to consent to the waiver of those rights and procedures and to ensure that any contract relating to those rights and procedures be entered into as a matter of voluntary consent, not coercion.” Id. Arbitration is not singled out by AB 51. Rather, AB 51 covers a range of waivers, including non-disparagement clauses and non-disclosure agreements. AB 51 was enacted with an effective date of January 1, 2020. 

In Chamber of Commerce of United States v. Bonta (9th Circuit 2021) 13 F. 4th 766, the 9th circuit court of appeals which has jurisdiction over AB 51 and California, answered the question of “Whether § 432.6 to the California Labor Code is preempted by the Federal Arbitration Act (“FAA”) and is AB 51 therefore unenforceable? The 9th Circuit held that AB 51 does not violate the FAA and is enforceable. Therefore, your employer cannot require you to sign an arbitration agreement as a condition of employment AND cannot retaliate against you, such as by refusing to hire you, for not signing an arbitration agreement as a condition of employment. 

AB 51 added § 432.6 to the California Labor Code. That section provides:

1. A person shall not, as a condition of employment, continued employment, or the receipt of any employment-related benefit, require any applicant for employment or any employee to waive any right, forum, or procedure for a violation of any provision of the California Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3 of Title 2 of the Government Code) or this code, including the right to file and pursue a civil action or a complaint with, or otherwise notify, any state agency, other public prosecutor, law enforcement agency, or any court or other governmental entity of any alleged violation.
2. An employer shall not threaten, retaliate or discriminate against, or terminate any applicant for employment or any employee because of the refusal to consent to the waiver of any right, forum, or procedure for a violation of the California Fair Employment and Housing Act or this code, including the right to file and pursue a civil action or a complaint with, or otherwise notify, any state agency, other public prosecutor, law enforcement agency, or any court or other governmental entity of any alleged violation.
3. For purposes of this section, an agreement that requires an employee to opt out of a waiver or take any affirmative action in order to preserve their rights is deemed a condition of employment. 

Conclusion

With the Ninth Circuit’s recent 2021 decision in Chamber of Commerce of United States v. Bonta, California Assembly Bill 51 is enforceable and still good law.  Therefore, you do not have to sign an arbitration agreement as a condition of employment and it is this lawyer’s position that you should not sign an arbitration agreement with your employer if you have the opportunity to opt-out for reasons that are discussed in another blog post.