Updates on California's Ban on Arbitration Agreements as Condition of Employment

Many employers, including small businesses and family offices, use standard forms of agreements and offer letters with their employees. These forms often contain clauses requiring arbitration in the event of a dispute between the employee and an employer.

However, in 2019, California's legislature passed a law prohibiting employers from requiring employees to sign arbitration agreements as a condition of employment. The law was set to take effect on January 1, 2020, but the law was challenged in court and its effective date was put on hold—leaving employers in the dark. Now, the 9th Circuit has shed some light on the situation.

It is extremely important that businesses, even closely held family offices, make sure that their form agreements are up-to-date and in full compliance with the law. This article from DWT's employment services group provides much needed information for employers in California, including what they need to do to ensure that their employment contracts dating back to January 1, 2020, are in compliance with the law, as well as the severe penalties employers may face if they do not comply.