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.

On January 5, 2023, the Federal Trade Commission (FTC) proposed a nationwide ban on non-compete clauses.  The proposed ban follows initial findings by the FTC that non-competes constitute an unfair method of competition, which violates Section 5 of the FTC Act.  This also follows through on President Biden’s 2021 Executive Order on Promoting Competition in the American Economy, which encourages the Commission to take action against the unfair use of non-compete clauses and other potentially restrictive covenants that may unfairly limit workers’ wages and mobility.

The proposed rule includes three main elements:

1. It categorizes all non-compete agreements to be unfair methods of competition and makes it illegal under Federal law to enter into or maintain non-competes with any workers, including employees, independent contractors, externs, interns and volunteers;
2. it requires employers to rescind existing non-competes; and
3. it requires employers to notify current and former employees of the rescission and provides a template for such notices.

The FTC has estimated that the new rule could increase wages by nearly $300 billion per year.  While still subject to a public comment period, finalization and judicial review, if implemented, the new rule would have a seismic impact on employment agreements nationwide.  Naturally, we will keep you informed of further developments.

January 1, 2023 will see the introduction of hundreds of new laws in California.  While most will go unnoticed by the vast majority of the public, here are just a handful of new laws which will likely have widespread impact.

Jaywalking rules relaxed: Police officers will be prohibited from stopping or citing people for jaywalking “unless a reasonably careful person would realize there is an immediate danger” of a collision with a vehicle or bicyclist.  In other words, pedestrians will no longer be cited for crossing the street outside of a crosswalk, unless they are in immediate danger of being hit.

Increase to minimum wage: Beginning on January 1, 2023, all California employers, regardless of size, must provide their employees a minimum wage of not less than $15.50 per hour.  Many California cities, including San Francisco, already have ordinances in place that mandate a higher minimum wage.

Abortion rules eased: Nurse practitioners will now be able to perform first-trimester abortions without a doctor’s supervision.  This is one of about a dozen new laws intended to increase abortion access in California, some of which have already taken effect.

Rape kit DNA: Police departments will be prohibited from using the DNA profile of sexual assault survivors in investigations of unrelated crimes.  The new law was proposed after it came to light that the San Francisco Police Department was using DNA from rape kits to identify suspects in unrelated crimes, prompting a national outcry.

Restriction on fur sales: Finally, in a blow to fashionistas, the sale and manufacture of new fur clothing and accessories will be outlawed.  The law passed in 2019, but legislators delayed implementation until 2023 to give retailers time to unload their inventories.  Retailers can still sell secondhand fur clothing or décor and the ban will not apply to faux fur.  The new law does not apply to leather, taxidermied animals, cowhides and the full skin of deer, sheep and goats.