Where did Arbitration Land in 2023?

Where did Arbitration Land in 2023?

By Jacquelyn Thorp, MSHR, SPHR, PHRca

After much debate and back and forth, on February 15, 2023, the Ninth Circuit Court of Appeals issued a decision in Chamber of Commerce of the United States of America, et al. v. Bonta, et al., that invalidated California’s AB 51 — the latest in the long-running litigation over whether California may prevent employers from requiring arbitration agreements as a condition of employment.

The Ninth Circuit ruled that California employers can require employees and applicants to sign arbitration agreements as a condition of employment, reversing its own prior decision.

Although, there are some important caveats to remember.

Arbitration agreements have generally required employees to agree to settle out of court, through an arbitration case, any dispute that arises with their employer. As of February 15, 2023, California employers may continue to require mandatory arbitration as a condition of employment after a divided Ninth Circuit held that the Federal Arbitration Act (FAA) preempted Assembly Bill 51 (AB 51) after an almost three-year legal battle.

However, employers may not require employees to waive any right, forum, or procedure for a violation of the FEHA or the California Labor Code. Federally, under H.R. 4445, employers can not compel arbitration for sexual-harassment or sexual-assault claims.

Current law provides that if an employer fails to pay required arbitration fees (either associated with initiation of the arbitration or during the pendency of the arbitration) within 30 days of the due date, the employer is in material breach of the arbitration agreement and the employee may either proceed with a claim in court or obtain an order requiring the employer to pay the arbitration fees and proceed in arbitration, along with an order imposing various forms of sanctions (monetary, issue, evidentiary, terminating).

Resources: Fisher Phillips, SHRM, and Employers.org