California law generally provides that written agreements to submit disputes to arbitration are valid, enforceable, and irrevocable, subject to the same grounds that may invalidate other contracts. The Federal Arbitration Act (FAA) similarly generally requires enforcement of arbitration agreements, but excludes or restricts enforcement of such agreements in certain circumstances. For example, federal law permits individuals asserting sexual assault or sexual harassment disputes to elect not to enforce certain pre-dispute arbitration agreements.
AB 2155 expressly incorporates the federal limitations under the FAA into the California Arbitration Act. A written agreement to arbitrate is now unenforceable under California law to the extent it would be unenforceable under the FAA. The Legislature specifically identified federal exclusions involving certain transportation workers and the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment as among the exclusions incorporated into California law.
Employers using arbitration agreements should therefore review existing and future agreements to ensure they are not attempting to compel arbitration where federal law precludes enforcement of such agreement. The law does not prohibit arbitration generally, but it limits enforcement in circumstances where the FAA precludes such enforcement.
AB 2155 amends Code of Civil Procedure section 1281 to make an arbitration agreement unenforceable under California law to the extent it is unenforceable under the FAA.
