AB 2155 brings federal limits for transportation workers and harassment claims into California law
Many employers ask workers to sign arbitration agreements. These agreements say that if a legal dispute comes up, it will go to a private arbitrator instead of a court. In California, two different laws can be used to enforce these agreements. When one law didn’t allow arbitration for a certain worker or claim, employers could sometimes rely on the other as a backup plan.
That backup plan is about to shrink. Governor Gavin Newsom signed Assembly Bill 2155 on June 30, 2026, and it takes effect on January 1, 2027. We’re sharing this now so you have time to review your agreements with your legal counsel before the new year.
How the backup plan worked
Two laws govern arbitration agreements in California. The first is the Federal Arbitration Act (FAA). The second is the California Arbitration Act (CAA). In most cases, either law can be used to hold workers to an arbitration agreement. The difference is that federal law carves out certain workers and claims, and California law never had those carve-outs.
When a worker showed that one of those federal exceptions applied, employers could still argue that the agreement should be enforced under the CAA. According to the California Senate Judiciary Committee’s analysis, some courts agreed and sent claims to arbitration that federal law would have let go to court.
AB 2155 changes that. It adds a new rule to California’s arbitration law: an agreement is not enforceable under state law to the extent it’s not enforceable under the FAA. The bill passed both houses of the Legislature without a single “no” vote.
| Before January 1, 2027 | Starting January 1, 2027 | |
| Worker is exempt from the FAA | Employer could try to enforce the agreement under the CAA | The CAA follows the FAA, so this fallback is likely gone |
| Sexual harassment or assault claim | State law arguments for arbitration were possible | State law matches federal law, and the worker can choose court |
| All other workers and claims | Arbitration generally enforceable | No change |
The two federal exceptions California now follows
The Legislature said its goal was to bring all of the FAA’s exceptions into state law. Two are named directly.
Transportation workers
The FAA doesn’t apply to the employment contracts of seamen, railroad employees, and other workers engaged in interstate or foreign commerce. Over the past several years, the U.S. Supreme Court has made clear this group is broader than many employers expected. A Congressional Research Service summary walks through the key rulings:
- The exception covers independent contractors as well as employees.
- It covers workers who play a direct role in moving goods across state or national borders. In one case, that included an airport ramp supervisor who loaded and unloaded cargo.
- The worker doesn’t need to work for a transportation company. In 2024, the Court rejected a transportation industry requirement for delivery drivers who worked for a bakery company. The Court looked at the job each worker does, not the type of company they work for.
California law never included this exception. So when a court found that a worker fell under it, the employer still had a second chance to push for arbitration using state law, as Greenberg Traurig explains. AB 2155 takes most of that second chance away.
Sexual harassment and sexual assault claims
In 2022, Congress passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA). It lets a person bringing these claims choose to go to court, even if they signed an arbitration agreement before the dispute began. AB 2155 makes California law match this rule, so state law can’t be used to get around it.
Does this affect your workforce?
For many workers and many types of claims, nothing changes on January 1. Arbitration is still allowed in California. The new law matters when federal law already says arbitration can’t be required. To see whether your agreements may be affected, ask yourself these questions:
- Do any of your California workers move goods or people across state lines, or play a direct role in that movement?
- Do you place or engage drivers, warehouse workers, airport crews, or other logistics roles?
- Do you engage independent contractors in delivery or transportation work?
- Do you require workers to sign arbitration agreements as a condition of the job?
- Do your agreements cover sexual harassment or sexual assault claims?
If you answered yes to any of these, it’s worth a closer look with your legal counsel. Littler notes that transportation worker disputes are likely to feel the biggest impact.
What’s still unsettled
Courts haven’t yet ruled on how far AB 2155 reaches. Some law firms say it fully closes the transportation worker gap. Ogletree Deakins reads it more narrowly and points out that courts haven’t yet tested it in a transportation worker case. Littler adds that the law’s wide wording could lead to questions about whether more federal limits now apply in California. It’s wise to plan for change and watch how courts apply the law in 2027.
Steps to take before January 1
With your legal counsel, consider these steps:
- Identify roles that may count as transportation work. Look at what workers actually do, not just your industry.
- Review your agreements. Look at which types of claims they cover, which state or federal law they say applies, and how they treat lawsuits brought by groups of workers.
- Check how harassment and assault claims are handled. Make sure your agreements and processes reflect the worker’s right to choose court.
- Decide whether arbitration should be voluntary. Ogletree suggests employers consider voluntary programs, since California restricts making arbitration a condition of employment for workers outside the FAA.
- Plan for some disputes to go to court. Factor this into your risk planning and budgets for 2027.
How People2.0 can help
Laws like AB 2155 are a good reminder that the rules around how you engage workers can change quickly. At People2.0, we’ve spent more than 25 years helping organizations engage contingent workers and independent contractors through our employer of record and agent of record services. Part of that work is keeping an eye on new laws and sharing updates like this one, so you have time to prepare.
If you engage workers through People2.0 and have questions about how this change may relate to them, contact our team. We’re happy to talk it through and help you understand what it means for your workforce. For questions about your own arbitration agreements, your legal counsel is the best place to start.
This post is for general information only and isn’t legal advice. Please consult your legal counsel about how AB 2155 applies to your organization.
