Compliance » California Employers Can Require Arbitration As a Condition of Employment.

California Employers Can Require Arbitration As a Condition of Employment.


March 23, 2023

California’s legislature is making a concerted attempt to prevent employers from requiring employees to enter into arbitration agreements as a condition of employment. In 2019 it enacted a statute signed by the Governor that prohibited an employer from requiring an employee or applicant for employment to agree to arbitrate certain claims as a condition for being hired or for keeping a job. It also barred employers from using an employment contract that requires employees to take an affirmative step in order to opt out of an arbitration agreement. There were severe penalties for violating the statute. But in February, the Ninth Circuit ruled against the state in a suit brought by The Chamber of Commerce with a three-year legal history. In the link above, Venable cautions that there may be further appeals, but for now, California employers may impose mandatory arbitration as a condition of employment for employees and job applicants. The decision, however, does reinforce the principle that arbitration agreements may continue to be invalidated on other contractual grounds, like unconscionability or fraud.

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