Update: Challenge to California’s Arbitration Agreement Law Marches On
Update: Challenge to California’s Arbitration Agreement Law Marches On

Employers throughout California have been keenly awaiting the final decision from the 9th Circuit Court of Appeals regarding the United States Chamber of Commerce’s challenge to California Labor Code section 432.6, which is designed to prohibit employers from enforcing mandatory arbitration agreements or requiring them as a condition of employment.

In our last report, the 9th Circuit was awaiting the decision from the United States Supreme Court in the Moriana v. Viking River Cruises case, which also addressed the applicability of the Federal Arbitration Act’s (“FAA”) preemption of state-imposed limitations on employment arbitrations.  With the recent ruling in Moriana, on August 22, 2022, a majority of the 3-judge panel in the 9th Circuit voted sua sponte to grant a rehearing of the issue, which had previously held that Labor Code section 432.6 was not in violation of federal law.  Employers should be pleased with this recent development as it signals that the 9th Circuit might consider reversing course and affirm the lower court’s decision, which would return the right to employers to issue mandatory arbitration agreements.


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