The California Chamber of Commerce today announced its first identified job killer of 2019 — AB 51 (Gonzalez; D-San Diego). The bill, which is scheduled for hearing on March 6 in the Assembly Labor and Employment Committee, would prohibit arbitration of labor and employment claims as a condition of employment. The measure is virtually identical to AB 3080 (Gonzalez) from 2018 which was vetoed by Governor Jerry Brown because he recognized that the measure plainly violated federal law. The measure is also similar to AB 465 (Hernandez) which was vetoed in 2015.

AB 51 (Gonzalez) is a job killer due to the significant increased costs employers will face as a result of more litigation and the expense of delayed dispute resolutions.  In addition, it is well understood that if signed into law, the proposal would be preempted by federal law. Both the California Court of Appeal and the U.S. Supreme Court have specifically held that state legislation trying to ban arbitration agreements is preempted by federal law.  In fact, AB 51’s limitation on the ability to form an arbitration agreement as a condition of employment conflicts with U.S. Supreme Court Justice Elena Kagan’s opinion in Kindred Nursing Centers Ltd. Partnership v. Clark, that federal law protects and preempts state law regarding both the formation of arbitration agreements as well as the enforcement of arbitration agreements. 

 AB 51 also proposes to add a new private right of action under the Fair Employment and Housing Act (FEHA) and exposes employers to criminal liability for any violation.

Committee Hearing

AB 51 will be heard in the Assembly Labor and Employment Committee on Wednesday, March 6.