On June 30, 2026, Governor Newsom signed Assembly Bill 2155 (Chapter 46, Statutes of 2026), amending Section 1281 of the Code of Civil Procedure, the core enforcement provision of the California Arbitration Act (CAA). The new law passed both houses without a single no vote and takes effect January 1, 2027. It adds one sentence, but that sentence has real consequences for employers: a written arbitration agreement “is not enforceable under this section to the extent the agreement is not enforceable under the Federal Arbitration Act.”
Until now, the FAA and the CAA operated as parallel enforcement tracks, and when federal law blocked arbitration, employers could sometimes still compel arbitration under state law. That fallback mattered most in two situations: workers exempt from the FAA under 9 U.S.C. Section 1 (transportation workers engaged in interstate commerce, such as drivers and delivery personnel), and claims covered by the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), which lets an employee alleging sexual assault or sexual harassment elect to void a predispute arbitration agreement. The Legislature stated its purpose plainly: to incorporate all FAA exclusions, including the EFAA, into the CAA. The Court of Appeal had already held that a California choice-of-law clause cannot be used to sidestep the EFAA (Casey v. Superior Court (2025) 108 Cal.App.5th 575); AB 2155 codifies that result and extends it to cases where the FAA never applied at all.
For business owners and HR professionals, the practical effects are these. Employees who allege sexual harassment or sexual assault can choose court over arbitration regardless of what their agreement says or which law it selects. Transportation-sector and other FAA-exempt workers can no longer be compelled to arbitrate under a state-law fallback. And because the statute is silent on whether it reaches existing agreements and pending cases, expect plaintiffs to argue that the new rule applies to any motion to compel heard on or after January 1, 2027. Arbitration remains fully available for most other employment claims, but only on the terms the FAA allows.
Before January 1, 2027: Have employment counsel audit your arbitration agreements now: remove any reliance on the CAA or a California choice-of-law provision to accomplish what the FAA will not, and add an express EFAA carve-out.
Our experienced employment law attorneys are standing by if you have questions about how AB 2155 affects your agreements, call (805) 586-1381 to schedule a consultation.