A new state law ensures that individuals who fall outside the parameters of the Federal Arbitration Act or whose claims are excluded from mandatory arbitration under federal law can’t be forced to arbitrate under California law.
California Governor Gavin Newsom signed Assembly Bill 2155 (AB 2155) on June 30th. The law amends California Code of Civil Procedure section 1281 so that arbitration agreements are unenforceable under the California Arbitration Act (CAA) to the extent they’d be unenforceable under the Federal Arbitration Act (FAA).
AB 2155 Amends California Code of Civil Procedure
Prior to this, section 1281 recognized written arbitration agreements as “valid, enforceable and irrevocable,” subject to conventional contract defenses. In the past, employers in the state frequently asserted that if the FAA didn’t apply, and, as a result, arbitration could be compelled under the CAA (which didn’t include a transportation worker exemption). AB 2155 effectively defeats this argument in California. Under the new law, if an agreement is unenforceable under the FAA because of the transportation-worker exemption, it is now also unenforceable under the CAA.
The Legislature stated that the policy of California is now “to ensure that all persons have the full benefit of the rights, forums, and procedures established under state law.”
To that end, the law incorporates all of the exclusions of the Federal Arbitration Act into the California Arbitration Act, “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.” This includes sexual harassment or sexual assault claims.
Section 1281 of the California Code of Civil Procedure is now amended to read:
A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.
Notwithstanding subdivision (a), a written agreement to submit to arbitration is not enforceable under this section to the extent the agreement is not enforceable under the Federal Arbitration Act (9 U.S.C. Sec. 1 et seq.).
Takeaway
The FAA provides that specific transportation workers who engage in interstate commerce are exempt from the Act. California employers should understand that AB 2155 will likely have an immediate effect on employment issues concerning these workers. This may include rideshare, delivery, and “last mile” drivers.
Courts will examine this amendment, and employers should anticipate renewed challenges to arbitration agreements. Existing arbitration programs should be reviewed before the law takes effect on January 1, 2027.
Contact Eanet, PC with any questions about your arbitration agreements and the impact of this new law.
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About the Author
Matthew L. Eanet, Esq.
Matt is managing shareholder at Eanet, PC, a Los Angeles litigation boutique he founded in 2012. He's an expert in complex commercial litigation matters involving real estate, employment, trade secret, trademark and trade dress, data breach, privacy and general business disputes, served as a U.S. Army JAG prosecutor, and has been selected by Super Lawyers (California) every year from 2015-2026.
Reviewed July 2026