Last month a divided Ninth Circuit panel ruled that California employers can require workers to sign an arbitration agreement as a condition of employment.  This is a reversal of the panel’s September 2021 ruling which allowed partial enforcement of A.B. 51, which California enacted to protect employees from “forced arbitration.”

The panel decided to revisit the case following the United States Supreme Court’s ruling in Viking River Cruises v. Morian, which the U.S. Chamber of Commerce and the California Chamber of Commerce argued invalidated the law.  In this ruling, the Supreme Court upheld that the Federal Arbitration Act preempts state laws, such as A.B. 51, that aim to limit arbitration agreements.  “Because the FAA’s purpose is to further Congress’s policy of encouraging arbitration, and A.B. 51 stands as an obstacle to that purpose, A.B. 51 is therefore preempted,” the majority Ninth Circuit panel stated in its opinion.

This win for California employers allows them to continue to mandate arbitration agreements with employees without the potential of civil or criminal liability.  However, this may not be the end of the story.  California employers would be well-advised to continue to track developments on this issue as the State of California evaluates its next steps and response to this ruling.