On June 30, 2026, Governor Newsom signed Assembly Bill 2155 (AB 2155), amending California Code of Civil Procedure section 1281 to align the California Arbitration Act ("CAA") with the Federal Arbitration Act ("FAA"). The law takes effect on January 1, 2027. Employers with California arbitration agreements should be aware of the change, though, as explained below, its practical impact is likely to be modest for most employers.

What the Law Does

For years, employers who could not rely on the FAA to enforce an arbitration agreement could invoke the CAA to compel arbitration of certain types of employment-related claims. AB 2155 closes that option. It adds a new subdivision (b) to CCP section 1281, stating that an arbitration agreement is “not enforceable under [the CAA] to the extent the agreement is not enforceable under the Federal Arbitration Act.”

In other words, beginning January 1, 2027, if a claim or a worker falls outside the FAA's coverage, the CAA will no longer serve as a fallback basis for compelling arbitration of that claim.

The Legislature identified two FAA exclusions it intended to import into the CAA:

• The transportation-worker exemption (9 U.S.C. § 1), which covers seamen, railroad employees, and other workers “engaged in foreign or interstate commerce,” a category that has been read to include certain delivery, rideshare, and logistics workers; and
• The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“EFAA”), which allows an individual asserting a covered sexual assault or sexual harassment claim to elect litigation over arbitration, notwithstanding a pre-dispute arbitration agreement.

The statutory language is broader than these two examples. It incorporates “any and all exclusions” under the FAA, so courts may ultimately read AB 2155 to reach even further. That scope will certainly be tested in litigation once the law takes effect.

Why This Isn't a Major Shift for Most Employers

AB 2155 is often discussed alongside class-action and PAGA representative-action waivers, but it does not affect either. Those waivers are governed by a separate, well-established body of law that AB 2155 leaves untouched. The U.S. Supreme Court's decision in AT&T Mobility v. Concepcion (2011) held that the FAA preempts state rules invalidating class-action waivers in arbitration agreements, and Viking River Cruises v. Moriana (2022) confirmed that individual PAGA claims may likewise be compelled to arbitration. Employers with properly drafted class waivers and clauses requiring arbitration of individual PAGA claims should not expect AB 2155 to change how those provisions are enforced.

The two exclusions AB 2155 targets are also narrower in practice than they may first appear:

• Sexual harassment and assault claims have been effectively non-arbitrable since 2022 under the federal EFAA, regardless of state law. Incorporating the EFAA into the CAA is largely confirmatory rather than a new restriction.
• The transportation-worker exemption already applies directly under the FAA, as confirmed by the U.S. Supreme Court in Southwest Airlines Co. v. Saxon (2022) and New Prime Inc. v. Oliveira (2019). Employers with exempt transportation workers already knew that arbitration was unavailable for that population; AB 2155 removes a state-law workaround that few employers were relying on in any event.

For employers whose workforce does not include exempt transportation workers and whose agreements are not being challenged on EFAA grounds, day-to-day arbitration practice, including class waivers, discovery procedures, and arbitrator selection, should be unaffected.

Recommended Action Items

• Review existing arbitration agreements before January 1, 2027, particularly the choice-of-law and CAA fallback provisions.
• Identify any workforce segments that could plausibly qualify for the FAA's transportation-worker exemption (e.g., delivery, last-mile, or interstate logistics roles), and consider whether a tailored approach is needed for that population.
• Confirm that sexual harassment/assault carve-out language in existing agreements is up to date and consistent with the EFAA.
• Monitor case law clarifying the extent to which AB 2155's “any and all exclusions” language extends beyond the two examples the Legislature named.

This alert is provided for general informational purposes only and does not constitute legal advice. Please contact us to discuss how AB 2155 may affect your specific arbitration agreements.