Legislative Update: Conforming State Arbitration Law to the Federal Arbitration Act (AB 2155)
As we enter this season of legislative enactments in which the Governor selects which measures to either sign, allow to become law without signature, or veto, we would like to inform our readers about newly enacted Assembly Bill (AB) 2155.
This bill provides that a written agreement to submit to arbitration is not enforceable under the California Arbitration Act (CAA) to the extent the agreement is not enforceable under the Federal Arbitration Act (FAA).
Background on arbitration agreements:
According to the Consent analysis on AB 2155 prepared by the Office of Senate Floor Analyses:
Arbitration is an alternative method for resolving legal disputes. Instead of going through the formal, public court process, the parties to the dispute submit their evidence and legal arguments to a private arbitrator (or a panel of arbitrators) who decides the case. Generally, the arbitration decision is not appealable. Generally, supporters of arbitration assert that private arbitration provides a cheaper, faster, more efficient form of dispute resolution than the overburdened courts, because they are able to limit discovery, set their own rules for presenting evidence, schedule proceedings at their own convenience, and select the third party who will decide their cases. However, critics of private arbitration contend that it is an unregulated industry, which is often costly and unreceptive to consumers and employees. Consumer advocates view mandatory arbitration as putting consumers and employees on an uneven playing field that creates an inclination by arbitrators to decide cases in favor of businesses. They further view arbitration as an expensive process which also puts consumers at a disadvantage by imposing procedural limitations on their ability to pursue their legal claims.
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The FAA was enacted by the U. S. Congress in 1925 in response to widespread judicial hostility to arbitration agreements. Section 2 of the FAA generally provides that a written provision in any contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. (See 9 U.S.C. § 2; similar language is contained within the CAA at Code Civ. Proc. § 1281.) In assessing whether a state law is preempted by the FAA, three key aspects of the law surrounding arbitration and preemption are especially relevant. First, the federal courts have ruled that the FAA was intended to promote arbitration.[] Second, state laws or rules that interfere with the enforcement of arbitration agreements are preempted, except on such grounds as exist at law or in equity for the revocation of any contract.[] Third, state laws that explicitly or covertly discriminate against arbitration agreements as compared to other contracts are also preempted.[]
However, some exemptions to the FAA have been passed. First, contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce are exempt from the FAA and have been for almost 80 years. (9 U.S.C. § 1.) More recently, Congress enacted the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 to make an agreement to arbitrate invalid and unenforceable if a person subject to the agreement is alleging conduct that constitutes sexual harassment or sexual assault and that person chooses not to arbitrate the claim but pursue it in court. (9 U.S.C. § 401 et seq.)
The CAA does not contain the two specific exemptions to the FAA. The sponsors of the bill note that this has led to some courts requiring parties to arbitrate claims under the CAA that would not be required to be arbitrated under the FAA. (See Doe v. Los Alamitos Medical Center, Inc. No. G063959, 2025, and Casey v. D.R. Horton (108 Cal. App. 5th 575 (2025).) This bill seeks to ensure that this situation does not continue to occur by amending the CAA to provide that a written agreement to submit to arbitration is not enforceable under the CAA to the extent the agreement is not enforceable under the FAA.
Detailed breakdown of AB 2155:
This bill:
1) States that it is the purpose of this bill to incorporate into the CAA any and all exclusions under the FAA (9 U.S.C. § 1 et seq.), including contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce, and the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (9 U.S.C. § 401 et seq.), including claims that relate to a sexual harassment dispute or sexual assault dispute. 2) States that the Legislature finds and declares that it is the policy of this state to ensure that all persons have the full benefit of the rights, forums, and procedures established under state law.
2) States that the Legislature finds and declares that it is the policy of this state to ensure that all persons have the full benefit of the rights, forums, and procedures established under state law.
3) States that a written agreement to submit to arbitration is not enforceable under the CAA to the extent the agreement is not enforceable under the FAA (9 U.S.C. § 1 et seq.).
Questions?
Rosasco Law Group can help with any and all compliance-related needs in the employment law arena. Now that the 2026 legislative session is wrapping up, you may be reviewing bills on the Governor’s desk or recent enactments and wondering whether your workplace has covered all of its bases. Give our office a call to stay up-to-date with the latest laws.
