Bottom Line

On Oct. 29, the U.S. Court of Appeals for the Ninth Circuit affirmed a preliminary injunction barring the State of California from enforcing SB 399, which prohibits California employers from holding mandatory meetings to share their views on political or religious matters, including unionization. The court found that the business groups challenging SB 399 are likely to prove it is an unconstitutional, content-based restriction on employer speech. Because the ruling is preliminary, though, employers should treat it as a meaningful but provisional win rather than the final word.

The Law at Issue

SB 399, which took effect Jan. 1, 2025, bars California employers from disciplining or threatening employees who decline to attend an employer-sponsored meeting or receive employer communications whose purpose is to convey the employer’s opinion about religious or political matters. The statute defines “political matters” broadly to include elections, political parties, legislation, regulation, and decisions to join or support a political or labor organization. The law carries a civil penalty of $500 per employee per violation, authorizes the Labor Commissioner to investigate and enforce the law, and gives employees a private right of action that can include injunctive relief and damages, including punitive damages.

The Decision

In California Chamber of Commerce v. Bonta, the California Chamber of Commerce, the California Restaurant Association, and the Western Growers Association brought a pre-enforcement challenge, arguing that SB 399 violates the First Amendment and is preempted by the National Labor Relations Act (NLRA). The district court agreed on both grounds and enjoined enforcement. The State of California appealed.

On standing, the Ninth Circuit focused on Western Growers members who hold “all-hands” meetings to discuss legislation affecting their businesses. The court reasoned that calling a meeting “all-hands” signals that everyone is expected to attend, and that SB 399 can plausibly be read to reach implicit, not just explicit, threats of consequences for skipping. The court drew support from a 2024 National Labor Relations Board decision, which treated a meeting as compulsory whenever employees could reasonably believe attendance is required. The panel also found a credible threat of enforcement, emphasizing that any employee, and not only the state, can sue.

On the merits, the court rejected California’s position that SB 399 regulates conduct rather than speech. The Ninth Circuit panel held that SB 399 is content-based and speaker-based, and therefore subject to a “strict scrutiny” standard of review. The panel did not decide the NLRA preemption question.

Key Implications for Employers

• The Injunction Is Not a Final Judgment. The case returns to the district court, and the ruling addresses only the likelihood of success at the preliminary injunction stage.
• Labels and Workplace Culture Matter. The court’s standing analysis shows that a meeting can be treated as mandatory based on how employees reasonably perceive it, even without an express attendance requirement.
• Preemption Remains Unresolved. Because the Ninth Circuit did not reach the NLRA preemption question, that argument remains available to challengers as the litigation continues.
• The Ruling Has Geographic Limits. The decision addresses only California’s statute. Employers operating in other states with captive audience laws should not assume those laws are unenforceable.

Recommended Employer Actions

• Hold off on dismantling SB 399 compliance practices until the litigation is further along, and monitor for further appellate review or a final ruling.
• Review how meetings are described and scheduled. If attendance is voluntary, communicate this clearly and in writing, and avoid labels such as “all-hands” or “mandatory” that imply otherwise.
• Train managers who communicate about legislation, elections, or unionization on these recent developments. Federal labor law limits on threats, interrogation, and promises of benefits continue to apply regardless of SB 399’s status.
• For multistate employers, assess captive audience obligations state by state rather than applying a single national approach.

Takeaway

This recent Ninth Circuit decision gives California employers more freedom to communicate with their workforces on political and religious topics, but it is not a green light for unchecked practices. Until the case reaches final judgment, employers should communicate thoughtfully, make meetings voluntary, stay alert to developments in California and in other states with similar laws, and contact counsel to stay up to date on developments.