Compliance Bulletin

Legislature Adopts Anti-Arbitration Bill; Governor’s Signature Expected
September 7, 2015

Under a new bill enacted by the state Legislature and expected to be signed by the governor, AB 465 adopts a new policy protecting individuals from being deprived of certain employment-related rights through the use of “involuntary or coerced waivers.” Specifically, AB 465 would prevent California employers in most instances from requiring individuals to enter into arbitration agreements as a condition of their employment. Employers also may not retaliate or discriminate against someone who refuses to waive these rights. If signed by the governor, it exacerbates existing tensions between California and the Federal Arbitration Act (FAA), which prohibits state-law policies from disfavoring arbitration as a form of dispute resolution. Federal courts, under U.S. Supreme Court guidance, generally strike down policies that violate the FAA. AB 465 is thus susceptible to a credible preemption challenge. See CBA’s Regulatory Compliance Bulletin for more information.