At the end of last year, we reported that a federal district court had imposed a last-minute temporary restraining order to block California from enforcing its new law (AB 51), which would have imposed criminal penalties on California employers that use mandatory arbitration agreements. That court has now issued a preliminary injunction that continues to block AB 51 until the court decides the merits of the underlying lawsuit, which seeks to overturn AB 51 as preempted by federal law (United States v. Becerra, Case No. 2:19-cv-2456 KJM DB). For a recap of AB 51 and the procedural history leading up to this preliminary injunction, please refer to Troutman’s previous client advisory, “Court Temporarily Blocks California’s New Law (AB 51) That Prohibits Employers From Using Mandatory Arbitration Agreements.”
With the preliminary injunction in place, California employers may continue to use mandatory arbitration agreements as a condition of employment without fear of criminal prosecution. The preliminary injunction is expected to remain in effect until resolution of the underlying case, which could take at least a year. California employers should use this time to consider and review their employment dispute resolution goals, including any existing or desired arbitration agreements and practices, and consult with their legal counsel about best practices in drafting, updating, and distributing these agreements.