California employers can require workers to sign mandatory arbitration agreements as a condition of employment following a U.S. Court of Appeals ruling last month.

The Ninth Circuit ruled that California Assembly Bill 51 banning “forced arbitration” clauses is preempted by federal law, the Federal Arbitration Act. The bill attempted to work around the FAA, saying existing arbitration agreements were enforceable but that new employees must be given the choice of signing one.

AB 51 would have been a welcome change for job applicants presented with mandatory arbitration. If workers decline to sign these agreements, they probably won’t be hired. If they do sign, they can’t take their employer to court to seek remedies and compensation for violations of the law. Under forced arbitration, the employees’ only recourse is a secret proceeding often tilted in favor of the employer.

Forced arbitration also hurts lower-wage workers disproportionately. The National Employment Law Center found in 2019 that U.S. workers earning less than $13 an hour who were subject to employee-imposed forced arbitration were owed $9.27 billion in unpaid wages. Aspects of employment law covered by arbitration include minimum wage, off-the-clock duties, and overtime.

The appeals court ruled 2-1 in striking down AB 51 with U.S. Circuit Judge Sandra Ikuta, a George W. Bush appointee, writing in the majority opinion.

“Because the FAA’s purpose is to further Congress’s policy of encouraging arbitration, and AB 51 stands as an obstacle to that purpose, AB 51 was therefore preempted,” she wrote for the majority.

“AB 51 does not expressly bar arbitration agreements. There is no doubt, though, that AB 51 disfavors the formation of agreements that have the essential terms of an arbitration agreement. Because a person who agrees to arbitrate disputes must necessarily waive the right to bring civil actions regarding those disputes in any other forum, AB 51 burdens the defining feature of arbitration agreements.”

In his dissent, U.S. Circuit Judge Carlos Lucero, a Bill Clinton appointee, said the Supreme Court and the enactors of the FAA always intended that “arbitration is a matter of contract and agreements to arbitrate must be voluntary and consensual.” Clearly, the modern day employment arbitration agreement is neither voluntary nor consensual.

The California Attorney General’s Office could ask the full Ninth Circuit or the U.S. Supreme Court to review the ruling.

Despite the ruling delivering a blow to workers’ rights in California, some recent developments have benefited employees.

Last year, an amendment to the FAA became law that excludes allegations of sexual assault or harassment from forced arbitration agreements. Under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, victims can refuse arbitration and can pursue their claims in court so that companies can’t hide alleged misconduct in private proceedings.

And earlier this year, the Federal Trade Commission proposed a new rule that would prohibit employers from imposing noncompete clauses on workers, which would give them options to take jobs with better pay and working conditions, potentially raising wages.