Arbitration agreements are subject to certain rules to be enforceable under California and federal law. If an arbitration agreement does not meet these requirements, it may be declared unenforceable. This means that an employee cannot sue in court instead of being required to arbitrate under the contract agreement. In U.S. Chamber of Commerce v. Bonta, the Ninth District issued a 2-1 decision upholding AB 51`s ban on enacting binding labor arbitration agreements as a condition of employment. The court also quashed the district court`s injunction blocking the execution of AB 51 and sent the case back to the district court for a new hearing. Section 432.6 prohibits employers from requiring candidates to sign arbitration agreements “as a condition of employment, continued employment or receipt of an employment-related benefit.” The law then added criminal and civil penalties against any employer who retaliated, discriminated, threatened or dismissed an employee who refused to accept arbitration. The fact that such an agreement will not be unenforceable, coupled with the court`s finding that FEHA`s criminal and civil penalties would be excluded by federal law, are factors that employers should weigh with a lawyer before deciding to completely eliminate the use of arbitration agreements. Although the court did not invalidate Section 432.6, it ordered Section 433 of the Labor Code and Section 12953 of the Government Code to impose criminal and civil penalties on employers who violate Section 432.6, at least to the extent that they apply to signed arbitration agreements “covered by the FAA.” This raises the question of whether these sections apply in situations where an employee refuses to sign an agreement. The majority opinion on this issue is unclear. As a result, employers seeking to make employment conditional on the enforcement of an arbitration agreement may examine their particular circumstances to determine whether they pose an additional risk as a result of the Ninth District decision.

The Ninth District Panel of the Bonta Court disagreed with the District Court, noting that Section 432.6 of the Labor Code does not conflict with the FAA because it focuses on conduct that occurred before the existence of an arbitration agreement and does not invalidate voluntarily entered into arbitration agreements. The panel noted that the FAA`s PURPOSE is to enforce consensual arbitration agreements and that Section 432.6 of the Labor Code only prohibits agreements that are not consensual. However, the panel partially approved the District Court on the imposition of civil and criminal penalties by law. The Committee concluded that such penalties conflict with the FAA when applied to signed agreements (as this does not govern pre-agreement behavior), but penalties are appropriate in situations where the worker refuses to sign the agreement. And if candidates or employees refuse arbitration, the employer cannot retaliate (p.B dismiss or disqualify them). Perhaps a middle ground is to take steps to ensure that the use of arbitration agreements is voluntary and not imposed as a condition of employment. One possible consideration is to make these agreements “stand-alone” documents that are not incorporated into other documents or policies – reinforcing the argument that an employee is free to sign or not sign such an agreement. Onboarding platforms should also be programmed so that an employee can bypass the execution of the agreement before moving on to the next policy document. With respect to its sanctions, the court declared the civil and criminal penalties of ab-51 invalid as intended, but only “to the extent that they apply to signed arbitration agreements that fall under the faa`s jurisdiction.” With this caveat, the flip side of this attitude is that these penalties are not provided for (and apply to employers) when an employee does not actually sign a binding arbitration agreement. For example, employers appear to be subject to criminal and civil penalties if they make employment or benefits conditional on the performance of an arbitration agreement, if employees do not sign the agreement, but they are not subject to such penalties if an employee does not sign the agreement even if the employer has presented it as a mandatory condition of employment. An arbitration collective agreement is a contract signed between an employer and an employee in which any dispute between the two takes place before a private arbitrator rather than a California court. Such agreements are usually the subject of a broader agreement and are rarely a document in their own right.

Arbitration agreements can be short and hidden in a larger document. .