A three-judge panel of the Ninth Circuit held on February 15, 2023, that the Federal Arbitration Act preempts a California law designed to prevent employers from requiring workers to sign mandatory arbitration agreements. This decision is consistent with a long line of State and Federal cases, and is expected to have a significant impact on employment practices in the state, including hotels and everyone in the hospitality industry.
Appeals court blocks California bar on mandatory arbitration for workers
by JMBM's Labor & Employment Group
On February 15, 2023, a federal appeals court blocked a California law that prohibited employers from requiring their workers to resolve legal disputes in private arbitration.
A three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco in a 2-1 decision held that the law cannot be enforced because it conflicts with federal arbitration law. This ruling hands an important victory to business groups and employers across the state.
The 9th Circuit panel in 2021 upheld the law 2-1, but later agreed to reconsider the decision. One of the three judges was persuaded to reverse his prior ruling in this revised order, which revived a ruling by a lower court against the law. The case is U.S. Chamber of Commerce v. Bonta, 9th Cir., No. 20-15291, 2/15/2023.
In light of this important and helpful Court of Appeals decision, employers across the state should consider revising their arbitration agreement to take out any language that permits the employee to decide whether or not they wish to enter into it.
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