Chamber of Commerce of the U.S.A. v. Bonta, 13 F.4th 766 (9th Cir. 2021)

The Ninth Circuit Court of Appeals reversed in part a 2020 preliminary injunction issued by a district court and resurrected California Labor Code Section 432.6, the state’s latest attempt to outlaw arbitration in the employment context. As a result, employers in California once again face the prospect of incurring criminal and civil penalties for requesting that employees and applicants agree to arbitrate future disputes.

In a 2-1 ruling, the Ninth Circuit held that at least part of Section 432.6 is not preempted by the Federal Arbitration Act insofar as it prohibits “pre-agreement employer behavior,” requiring an applicant or employee to enter into an arbitration agreement — but only in those instances in which the employee fails or refuses to execute the agreement.  If, however, the employee does sign the arbitration agreement, then the statute does not apply per Section 432.6(f), and the employer is not in violation of the statute or subject to its criminal and civil penalties, which the Ninth Circuit struck down in that limited context.  Section 432.6 applies to arbitration agreements that were entered into, modified or extended on or after January 1, 2020.

In a spirited dissent, Judge Sandra Segal Ikuta noted:

[I]f the employer offers an arbitration agreement to the prospective employee as a condition of employment, and the prospective employee executes the agreement, the employer may not be held civilly or criminally liable. But if the prospective employee refuses to sign, then the FAA does not preempt civil and criminal liability for the employer under AB 51’s provisions.  In other words, the majority holds that if the employer successfully “forced” employees “into arbitration against their will” … the employer is safe, but if the employer’s efforts fail, the employer is a criminal.

Judge Ikuta went on to observe that the majority’s “tortuous ruling is analogous to holding that a statute can make it unlawful for a dealer to attempt to sell illegal drugs, but if the dealer succeeds in completing the drug transaction, the dealer cannot be prosecuted.”  See also Patterson v. Superior Court, 2021 WL 4843540 (Cal. Ct. App. 2021) (prevailing-party employer in a motion to compel arbitration may recover its attorney’s fees only if employee’s opposition to the motion was groundless). Employment set out in Dynamex Ops. W., Inc. v. Superior Court, 4 Cal. 5th 903 (2018) applies to the case.  The Court of Appeal held that the Dynamex ABC test does not apply because it is limited to claims governed by wage order that employ the “suffer or permit to work” standard, which are not at issue in this case.

However, the Court reversed the trial court’s judgment, holding that while the determination of whether the carriers are employees or independent contractors is governed by the common law test of S.G. Borello & Sons, Inc. v. Department of Indus. Relations, 48 Cal. 3d 341 (1989), the trial court failed to properly analyze the factors required by that opinion by, among other things, relying upon inapplicable regulations from the Employment Development Department.  See also Lawson v. Grubhub, Inc., 13 Cal. 4th 908 (9th Cir. 2021) (worker who did not sign class action waiver could not represent other similarly-situated workers who did; action remanded for decision of whether ABC test applies to expense reimbursement claims); American Soc. of Journalists & Authors, Inc. v. Bonta, 2021 WL 4568057 (9th Cir. 2021) (Assembly Bill 5 did not effectuate content-based preferences for certain kinds of speech by providing a narrower exemption for freelance writers and photographers).

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Photo of Tony Oncidi Tony Oncidi

Anthony J. Oncidi is the co-chair of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including…

Anthony J. Oncidi is the co-chair of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including litigation and preventive counseling, wage and hour matters, including class actions, wrongful termination, employee discipline, Title VII and the California Fair Employment and Housing Act, executive employment contract disputes, sexual harassment training and investigations, workplace violence, drug testing and privacy issues, Sarbanes-Oxley claims and employee raiding and trade secret protection. A substantial portion of Tony’s practice involves the defense of employers in large class actions, employment discrimination, harassment and wrongful termination litigation in state and federal court as well as arbitration proceedings, including FINRA matters.

Tony is recognized as a leading lawyer by such highly respected publications and organizations as the Los Angeles Daily JournalThe Hollywood Reporter, and Chambers USA, which gives him the highest possible rating (“Band 1”) for Labor & Employment.  According to Chambers USA, clients say Tony is “brilliant at what he does… He is even keeled, has a high emotional IQ, is a great legal writer and orator, and never gives up.” Other clients report:  “Tony has an outstanding reputation” and he is “smart, cost effective and appropriately aggressive.” Tony is hailed as “outstanding,” particularly for his “ability to merge top-shelf lawyerly advice with pragmatic business acumen.” He is highly respected in the industry, with other commentators lauding him as a “phenomenal strategist” and “one of the top employment litigators in the country.”

“Tony is the author of the treatise titled Employment Discrimination Depositions (Juris Pub’g 2020;, co-author of Proskauer on Privacy (PLI 2020), and, since 1990, has been a regular columnist for the official publication of the Labor and Employment Law Section of the State Bar of California and the Los Angeles Daily Journal.

Tony has been a featured guest on Fox 11 News and CBS News in Los Angeles. He has been interviewed and quoted by leading national media outlets such as The National Law JournalBloomberg News, The New York Times, and Newsweek and Time magazines. Tony is a frequent speaker on employment law topics for large and small groups of employers and their counsel, including the Society for Human Resource Management (“SHRM”), PIHRA, the National CLE Conference, National Business Institute, the Employment Round Table of Southern California (Board Member), the Council on Education in Management, the Institute for Corporate Counsel, the State Bar of California, the California Continuing Education of the Bar Program and the Los Angeles and Beverly Hills Bar Associations. He has testified as an expert witness regarding wage and hour issues as well as the California Fair Employment and Housing Act and has served as a faculty member of the National Employment Law Institute. He has served as an arbitrator in an employment discrimination matter.

Tony is an appointed Hearing Examiner for the Los Angeles Police Commission Board of Rights and has served as an Adjunct Professor of Law and a guest lecturer at USC Law School and a guest lecturer at UCLA Law School.