Key Points

  • The Ninth Circuit affirmed a preliminary injunction barring California from enforcing SB 399, Cal. Lab. Code ยง 1137, which prohibits adverse action against employees who decline to attend employer meetings about political or religious matters.
  • The Western Growers Association has pre-enforcement standing because its members' 'all-hands' meetings on legislation arguably carry an implicit threat that SB 399 prohibits, and any employee may sue to enforce the law.
  • The law regulates speech, not merely conduct, and is both content-based and speaker-based, so strict scrutiny applies.
  • The panel rejected California's captive-audience justification, holding that no federal appellate court has relied on that theory to sustain a content-based restriction on nongovernmental speech in a nongovernmental forum.
  • The panel did not reach the industry groups' claim that the National Labor Relations Act preempts SB 399.

A federal appeals court on Thursday kept California from enforcing a law that bars employers from punishing workers who skip company meetings about politics or religion, ruling that the measure likely violates employers' free-speech rights.

A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit affirmed a preliminary injunction entered by the U.S. District Court for the Eastern District of California, where Daniel J. Calabretta presided. Judge Richard C. Tallman wrote the opinion for a panel that also included Judges Richard A. Paez and Mark J. Bennett. No judge wrote separately.

The ruling leaves Senate Bill 399, which took effect on Jan. 1, 2025, unenforceable for now. The panel held that the law targets speech on particular topics and so must survive strict scrutiny. It also rejected California's defense, that employees are a "captive audience" the state may shield from their bosses' views. No federal appeals court, Judge Tallman wrote, has relied on that theory "to identify a compelling interest sufficient to support a content-based restriction on nongovernmental speech in a nongovernmental forum."

The law bars an employer from disciplining, or threatening to discipline, an employee who declines to attend a meeting or receive communications "the purpose of which is to communicate the employer's opinion about religious or political matters." It defines political matters to include elections, legislation, regulation and the decision to join a political party or labor organization. Employers face a civil penalty of $500 per employee per violation, and the law lets employees sue for damages, including punitive damages.

According to the opinion, the Legislature acted out of concern that workers were being made to attend such meetings on pain of discipline. "The Legislature believed that employees may feel compelled to adopt their employers' views on these matters because they did not want to lose their jobs," Judge Tallman wrote.

The plaintiffs are the California Chamber of Commerce, the California Restaurant Association and the Western Growers Association, nonprofit groups that together represent more than 13,000 California employers. They sued state officials and a state agency before the law took effect, arguing that it violated the First Amendment and was preempted by the National Labor Relations Act. The district court found both claims likely to succeed.

On appeal, California first argued that the groups lacked standing to challenge the law before it had been enforced against any of their members. The state read SB 399 to bar only punishing employees who skip meetings, which no member had said it planned to do. The panel found that at least Western Growers had standing, because its members hold "all-hands" meetings to discuss legislation. If everyone is expected at a meeting, Judge Tallman wrote, "an employee could reasonably conclude that truancy will incur consequences," and a plausible reading of the law treats such an implicit threat as a violation.

The panel found support for that reading in a 2024 National Labor Relations Board decision and in California's statement at oral argument that the answer depends on how employees perceive the workplace's history and culture. Because any employee can sue, the court said, that uncertainty created a credible threat of enforcement.

On the merits, the panel rejected California's argument that SB 399 regulates conduct, namely disciplining workers, rather than speech. The law would not protect an employee who skipped a meeting held to fill out tax paperwork, the court noted. It applies only when the employer uses the meeting to express an opinion. "Because employers are forbidden from taking adverse action only if they communicate certain messages at the underlying meeting, the law inevitably singles out employers based on their expressive activity," Judge Tallman wrote.

The panel said its conclusion "accords with" the Eleventh Circuit's 2024 decision in Honeyfund.com Inc. v. Governor, which held that Florida's Individual Freedom Act was functionally a regulation of speech. That law barred employers from requiring workers to attend training that endorsed certain ideas. The Ninth Circuit acknowledged that California's law, unlike Florida's, does not favor one viewpoint over another. But the panel wrote that being "viewpoint-neutral does not make it content-neutral."

The panel also held that SB 399 discriminates by speaker, because it is triggered only by the employer's own opinion. That feature, Judge Tallman wrote, was "another reason to conclude that strict scrutiny applies."

California argued that workers who depend on their paychecks are as captive as transit riders, clinic patients and public-school students, whom courts have called captive audiences. "California's argument goes too far," Judge Tallman wrote. The panel said those cases involved either the government managing its own property or rules that limit when, where and how people speak without regard to what they say.

The opinion closed its merits analysis with a passage from the Supreme Court's 1975 decision in Erznoznik v. City of Jacksonville: "the Constitution does not permit government to decide which types of otherwise protected speech are sufficiently offensive to require protection for the unwilling listener or viewer."

California did not contest the other requirements for a preliminary injunction, including irreparable harm. The panel declined to decide whether federal labor law preempts SB 399. "We need not (and do not) address preemption," Judge Tallman wrote.

Lonnie D. Giamela of Fisher & Phillips LLP argued for the industry groups. Deputy Attorney General Kristin A. Liska of the Office of the California Attorney General argued for the state. Bryan M. Killian of Morgan Lewis & Bockius LLP argued for the U.S. Chamber of Commerce and six other business groups, which filed as amici curiae, or friends of the court.

In the case, No. 25-6874, the industry groups sought a declaration that SB 399 is invalid and a permanent injunction against its enforcement.