California Law Takes Shot at Regulating Arbitration Agreements

States that try to limit the mandatory arbitration of workplace disputes have been stymied by rulings that say their efforts are preempted by the Federal Arbitration Act, a 1925 law bolstered by a line of U.S. Supreme Court rulings. California has taken a novel approach with a measure finalized this month that may have a chance to survive judicial review where other attempts have failed.

Non-Mandatory Arbitration: Instead of saying workplace arbitration agreements are unenforceable, the California law prohibits companies from requiring that applicants or workers sign arbitration contracts as a condition of employment.

Big Stakes Ahead: California’s law could ...