The Federal Arbitration Act (FAA), 9 U.S.C. §1 et seq., was enacted to counteract “judicial hostility” to arbitration. But what about thinly veiled state legislative hostility?

California’s AB 51 prohibits employers from conditioning employment on an applicant’s waiver of various rights, including the right to litigate. Although AB 51 does not single out agreements to arbitrate, it applies to them. And the penalties for employers who violate the provision are stiff: a fine of up to $1,000 and up to six months’ imprisonment, as well as the potential for civil litigation brought by the California Department of Justice or by an individual in a private suit.

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