In addition to having its employees sign the arbitration agreement in their own handwriting, the employer in that case expressly gave applicants and employees the option not to sign the arbitration agreement and still obtain or retain employment. I suggested employers consider giving employees the express right to opt out until resolution of a pending challenge to California’s statute prohibiting employers from requiring employees to sign pre-dispute arbitration agreements .
The FAA, however, makes any written arbitration agreement enforceable unless the agreement offends general principles of substantive and procedural fairness applicable to other kinds of contracts, such as rules barring agreements limiting substantive rights. The U.S. Supreme Court has said the FAA embodies “a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary.
The 9th Circuit majority rejected that gambit. AB 51 plainly “disfavors the formation of agreements that have the essential terms of an arbitration agreement.”