Rare Victory for California Employers: Ninth Circuit Says State Arbitration Law Preempted By Federal Law

California employers that utilize arbitration agreements can breathe a sigh of relief, for now, because the U.S. Court of Appeals for the Ninth Circuit has finally ruled that a California arbitration law is preempted by the Federal Arbitration Act (FAA). The law, AB 51, prohibits California employers from requiring employees to agree to arbitrate their claims as a condition of employment and imposes criminal penalties for violation of the act. This, according to the Ninth Circuit’s ruling in Chamber of Commerce of the United States of America et al. v. Rob Bonta et al, creates too great an obstacle to arbitration, and the California law is thus preempted by the FAA.