AB 51 (Gonzalez-Fletcher). Employment discrimination: Enforcement; Oppose. Chaptered.

This bill added Section 432.6 to the Labor Code. The bill prohibited an employer outside of the securities industry from requiring an employee to enter into any agreement that waived the right to a jury trial, i.e., an arbitration agreement, and prohibited the employer from retaliating against an employee who refused to sign such an agreement.

The bill applied to all agreements entered into, extended, or modified after January 1, 2020. It was virtually identical to AB 3080, which was vetoed by Governor Brown in 2018 because he believed that it was preempted by the Federal Arbitration Act (FAA). The author believed that the bill would not be preempted because it provided that it did not invalidate an arbitration agreement signed by the employee (even one required as a condition of employment) if the agreement was otherwise enforceable under the FAA.

The bill also made a violation of Section 432.6 an unlawful employment practice. Thus, an employer who violated the statute by requiring its employees to sign arbitration agreements as a condition of employment would be committing a misdemeanor.

The bill also stated that a provision in an arbitration agreement that allowed the employee to opt out of a "mandatory" arbitration agreement or required the employee to take any other affirmative action to avoid the waiver was also a violation of Section 432.6. CDRC opposed the bill, in part because it concluded that the bill was preempted and in part because it believed that employers would by and large decline to enter into voluntary arbitration agreements and this in turn would deprive access to justice for employees with modest claims.

The Chamber of Commerce and some allied organizations filed suit in the Eastern District of California to enjoin implementation of Section 432.6. On February 6, 2020, the court held that the statute was preempted by the FAA and granted plaintiffs' motion for a preliminary injunction. The defendants appealed to the Ninth Circuit which ultimately affirmed the district court. See Chamber of Commerce of the United States v. Bonta, 62 F. 4th 273 (9th Cir. 2023).