Arbitration agreements have remained an area of legal focus in California. On June 30, 2026, Gov. Gavin Newsom signed Assembly Bill No. 2155 (AB 2155) into law, amending California Code of Civil Procedure (CCP) Section 1281 and continuing the state’s focus on arbitration. The amendment provides that arbitration agreements are unenforceable under the California Arbitration Act (CAA) “to the extent” they would be unenforceable under the Federal Arbitration Act (FAA). The new law takes effect on Jan. 1, 2027.
Changes to CCP Section 1281
AB 2155 adds a new subdivision (b) to CCP Section 1281, intended to align the CAA with the FAA: “Notwithstanding subdivision (a), a written agreement to submit to arbitration is not enforceable under this section to the extent the agreement is not enforceable under the Federal Arbitration Act.”
AB 2155’s text expressly incorporates the exclusions identified under the FAA into the CAA. Such exclusions include:
- The FAA transportation-worker exemption, involving “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce,” and
- The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), which allows an individual alleging a covered sexual assault or sexual harassment claim to litigate rather than arbitrate their claims.
Significance of AB 2155
With respect to the FAA’s transportation-worker exemption, AB 2155 effectively closes the CAA loophole. Under Section 1 of the FAA, certain transportation workers engaged in interstate commerce are exempt from mandatory arbitration agreements. Courts have expanded the scope of this exemption, with recent decisions addressing workers such as rideshare drivers, delivery and last-mile workers, airline-related employees, and other transportation personnel.
Prior to AB 2155, even where the FAA exemption applied, California employers retained an important fallback argument allowing them to seek to compel arbitration under the CAA, which historically did not contain a comparable transportation worker exemption. This allowed California employers to potentially enforce arbitration agreements, even after losing a federal argument.
AB 2155 eliminates this strategy. Under the new law, if an arbitration agreement is unenforceable against a worker under the FAA due to the transportation worker exemption, it will also be unenforceable under the CAA.
The new law has also essentially codified the federal EFAA protections under the CAA. While the EFAA already gives individuals the right to invalidate pre-dispute arbitration agreements with respect to sexual assault and sexual harassment claims, with AB 2155’s amendments, California state law now mirrors the federal rule. Thus, arbitration agreements covering sexual assault or sexual harassment claims are unenforceable under both federal and California state law.
Key Takeaways for Employers
Employers who rely on arbitration agreements with transportation workers should consider reassessing their exposure. Workers who successfully establish FAA transportation worker exemption status now have a stronger basis to avoid arbitration, with no state law fallback available to employers in California.
Similarly, employers may not be able to compel arbitration of sexual assault or sexual harassment claims by pointing to California state law. AB 2155 eliminates the gaps between federal and state law on this issue, and both frameworks now stand together in prohibiting forced arbitration of specific claims.
Because the law does not take effect until Jan. 1, 2027, employers may wish to treat the remainder of 2026 as an opportunity to reassess their arbitration agreements in California, particularly for transportation and other potentially exempt worker populations. Agreements that have not been revisited in light of AB 2155 may provide less protection than employers currently expect.