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Governor approves bill that makes it more difficult for companies to use arbitration agreements

Gov. Gavin Newsom signed a bill Thursday that prohibits California businesses from retaliating against employees who refuse to sign arbitration agreements.

AB 51 by Assemblywoman Lorena Gonzalez (D-San Diego) precludes businesses from requiring workers to sign arbitration agreements that waive their right to sue their employers for alleged labor violations as a condition of employment.

The legislation was co-sponsored by organized labor and trial lawyers and opposed by California’s business community.

AB 51 is the third bill introduced in recent years that attempted to limit an employer’s use of arbitration agreements. Former Gov. Jerry Brown vetoed similar bills in 2015 and again last year.

The new law becomes effective Jan. 1, 2020.

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