By Gerald L. Maatman, Jr., Jennifer A. Riley, Daniel D. Spencer, and Kenny T. Tran
Duane Morris Takeaways: On June 30, 2026, Governor Newsom signed Assembly Bill 2155 (AB 2155), which amends California Code of Civil Procedure section 1281 to provide that any arbitration agreement deemed unenforceable under the Federal Arbitration Act (FAA) is likewise unenforceable under the California Arbitration Act (CAA). The amendment is designed to align California law with federal law by ensuring that the same limitations, exceptions, and exemptions governing the enforceability of arbitration agreements under the FAA also apply under the CAA.
Overview
AB 2155 expressly incorporates two significant FAA exemptions into the CAA, including: (1) the “transportation worker” exemption, which applies to contracts of employment for seamen, railroad employees, and other classes of workers engaged in foreign or interstate commerce; and (2) the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), which renders predispute arbitration agreements unenforceable with respect to claims involving sexual assault or sexual harassment disputes.
AB 2155 becomes effective on January 1, 2027, and the legislation contains no indication that it applies retroactively. Prior to this amendment, employers frequently argued that even if the FAA did not govern an arbitration agreement, the agreement remained enforceable under the CAA because California law did not recognize the FAA’s transportation worker exemption. AB 2155 eliminates that argument. Beginning January 1, 2027, if an arbitration agreement is unenforceable under the FAA due to the transportation worker exemption, it will likewise be unenforceable under the CAA.
Implications for Employers
Employers, particularly those whose operations involve interstate commerce, should review their arbitration agreements and dispute resolution strategies in anticipation of AB 2155’s effective date. The amendment is likely to increase litigation challenging the enforceability of arbitration agreements, including class and representative actions brought by transportation workers and claims falling within the scope of the EFAA.