On September 15, 2021, the U.S. Chamber of Commerce`s 9th Circuit v. Bonta (2-1) partially lifted an injunction, noting that California Labor Code Section 432.6, which prohibits employers from requiring employees to agree to arbitration agreements as a condition of employment as of January 1, 2020, can be widely enforced. In contrast, U.S. Justice Sandra Ikuta noted that “the Supreme Court has made it clear that the FAA anticipates this type of workaround, which is only the latest in the `wide variety of devices and formulas` that favor arbitration.” Discussing the recent Supreme Court guidelines, Justice Ikuta concluded that “a state cannot distinguish arbitration agreements by imposing special limitation rules at the foundation stage.” In addition, dissent concluded that the majority`s decision creates a division between the federal courts of appeal. Specifically, First Circuit has already struck down a Massachusetts order prohibiting securities forms from requiring customers to enter into arbitration agreements, and the Fourth Circuit has struck down a Virginia law requiring automakers to include a clause effectively prohibiting arbitration clauses. The obvious tension between the Court`s decision on AB 51 and these other decisions of the Federal Court of Appeal means that the battle over AB 51 is unlikely to be over. It is possible that the Ninth District will agree to hear the case again before a larger panel “in bench” of the court, or that the U.S. Supreme Court will agree to review the decision.

It is very likely that the panel`s decision will not be the last word on AB 51. The Court of Appeal overturned the trial court`s decision and forced Martinez to settle his claims. The court noted that the absence of Martinez`s initials on a particular provision had “no legal consequences” because Martinez`s signature at the end of the agreement supported his intention to accept all the terms it contains. TSC denied the allegations and asked the trial court to force arbitration. It argued that, although Gorlach had not signed the arbitration agreement, it had accepted it by continuing to hold employment at TSC. The arbitration agreement is therefore an implied contract between Gorlach and TSC. In addition, TSC argued that Gorlach is precluded from claiming that the arbitration agreement does not apply to it because it intentionally misled the employer into believing that it had signed it, and that TSC relied on its false statements to its detriment. If you think your employer has taken advantage of you, talk to an experienced labor attorney in California. At The Nourmand Law Firm, we can help you by advising you on your rights and representing you in a dispute with your employer.

We have over 20 years of experience dealing with issues such as workplace discrimination, sexual harassment, unlawful dismissal, retaliation, and wage and hourly violations, and we only represent employees so you know where our loyalty lies. Call us today at 800-700-WAGE (9243) or contact us via our online form. In this case, the employer provided evidence that the employee signed the arbitration agreement during her onboarding process. To access the online portal, an employee must enter their first and last name, as well as the social security number, as well as the employer`s customer ID and PIN, which are the same for all employees. Once registered, the employee must complete a W-4 tax withholding form and provide emergency contact information before accessing the arbitration agreement. Because of these requirements, according to the employer, the electronic signature on the arbitration agreement could only have been affixed to it by the employee. The Ninth Circuit`s decision to partially overturn Judge Mueller`s injunction reinstates the ban on binding employment arbitration agreements, but continues to block civil and criminal penalties against employers who receive arbitration agreements in violation of the law. This creates a strange paradox. Although AB 51 again makes compulsory labour arbitration agreements illegal, AB 51 does not repeal existing arbitration agreements, and the court`s decision to lift civil and criminal penalties appears to defuse the law altogether. Unfortunately for employers, the answers to the way forward with arbitration agreements are as clear as mud. An alarming decision by a California appeals court underscores the importance of reviewing all cases related to a potential employment claim.

In this case, an employee filed a lawsuit in California against her employers in April 2019. While the case was pending, the employers reportedly asked the employee to sign documents at work in December 2019. The employee states that her employers told her that the documents only referred to “updates of `expired` documents”. She also claimed that her employers had stated that she would be fired and would withhold her paychecks if she did not sign the papers. She stated that she was not allowed to consult her lawyer beforehand. She signed the documents, which included an arbitration agreement. Their employers then used the agreement to force arbitration into the lawsuit. The Court of Appeal found that there was sufficient evidence to support the trial court`s finding that the employer could not prove that the electronic signature on the arbitration agreement was that of the employee. The court further stated that under California law, there is no agreement if a contract is void due to fraud in performance. However, an agreement exists if a contract can only be contested for fraud in its performance. The court noted that there was no fraud in the enforcement of the arbitration agreement under California law in this case. The employee stated that her employers had misrepresented the nature of the documents and that she had not had time to consult with her lawyer before signing.

The court found that these claims did not constitute fraud in law enforcement. The court held that a party`s negligent recourse to another party`s submissions does not exempt a party who does not read a written agreement before signing it. She also noted that the worker had signed a version of the agreement in Spanish and that she had only been told that she had to sign it that day, and that she had therefore had the opportunity to read the contract before signing it. Therefore, the court concluded that in this case the contract was questionable only in light of the allegations. Therefore, all questions concerning the validity of the agreement must be decided by the arbitrator. Professional Note: To create a binding agreement when using electronic signatures, the employer should be able to prove that the employee who signed the document was the only person who could have done so. The law was due to come into force on 1 January 2020. On December 30, 2019, the U.S. District Court for the Eastern District of California ordered the application of Section A.B.51 on the grounds that the law was anticipated by the Federal Arbitration Act (FAA). That decision was appealed to the Court of Appeals for the Ninth Circuit, which issued its opinion on September 15, 2021.

The majority opinion indicates that AB 51 is not anticipated by the FAA because it only requires that arbitration agreements between employers and employees be voluntary and consensual. The court held that while arbitration agreements are a condition of employment, the agreement is not really voluntary because the employer can force a reluctant party to arbitrate and thus constitute an unfair labour practice. However, he noted that the criminal and civil penalties imposed by law are anticipated by the FAA. An acute dissent argues that the decision contradicts the statements of the U.S. Supreme Court and that, as long as the arbitration agreement is not unscrupulous, the fact that there is unequal bargaining power between the employer and the employee should not invalidate the agreement under standard contractual principles. The finding that this is the case treats arbitration agreements differently from other treaties and is therefore excluded from the FAA. Of course, the feasibility of labor arbitration in California may well be decided by the U.S. Supreme Court.

Right now, it`s a difficult and uncertain path for employers looking to enter into labor arbitration agreements in California. Plaintiff Joseph Martinez filed a series of class actions against his former employer, BaronHR, Inc., that forced arbitration. Martinez dismissed the request for enforcement of the arbitration on the grounds that he had not initialled the provision in which he expressed his consent to waive his right to a jury trial. Martinez argued that the absence of his initials expressed an intention not to arbitrate, even though he had actually signed the reason for the agreement. .