If your organization uses employment arbitration agreements, here’s one more reason to dust them off.

Governor Newsom recently signed AB 2155, which takes effect on January 1, 2027. The new law doesn’t ban arbitration or make arbitration agreements obsolete. Instead, it continues California’s effort to align its arbitration law with the Federal Arbitration Act (FAA) and clarifies that if an agreement isn’t enforceable under the FAA, it generally won’t be enforceable under California law either.

So, is this a game-changing new law? Probably not. Is it a good reminder that arbitration agreements shouldn’t sit in a file cabinet for ten years without anyone looking at them? Absolutely.

If there’s one thing we’ve learned over the past decade, it’s that arbitration law never seems to sit still. Between court decisions, new legislation, and changes in federal law, what worked five years ago may not be the best approach today.

We’ve talked to plenty of employers who say, “We have an arbitration agreement.” When we ask when it was last reviewed, the answer is often, “I’m not sure.” That’s a problem.

An arbitration agreement only helps you if it’s enforceable when someone files a claim. If it’s outdated or contains provisions that no longer comply with current law, you may find yourself litigating in court anyway.

That doesn’t mean employers should abandon arbitration. For many organizations, arbitration continues to make good business sense. It can provide a faster, more private, and often less expensive way to resolve employment disputes. But those benefits depend on having a well-drafted agreement that reflects current law.

That’s why we see AB 2155 less as a major shift and more as a timely reminder.

If you haven’t reviewed your arbitration agreement in several years, now is a good time. Make sure it reflects current California and federal law. Make sure it still fits your organization. And don’t assume that because it worked when you adopted it, it will work if you need to enforce it tomorrow.

The Bottom Line

AB 2155 isn’t a reason to panic. It is, however, a good reason to pull out your arbitration agreement, have it reviewed, and make any updates that are needed before the next dispute comes along.