Last year, we reported that Governor Gavin Newsom signed SB 399, codified as California Labor Code section 1137, into law. This statute bans employers from holding captive audience meetings, which are mandatory employer-sponsored meetings that discuss religious or political matters—including unionization. California is one of at least 12 states that have passed captive audience laws at the urging of labor unions.
On September 30, 2025, the U.S. District Court for the Eastern District of California issued a preliminary injunction in California Chamber of Commerce et al. v. Bonta et al., temporarily blocking enforcement of SB 399. Plaintiffs in the case argued that SB 399 is preempted by the National Labor Relations Act (NLRA) and infringes upon employers’ rights under the First Amendment of the U.S. Constitution. Defendants, meanwhile, asserted that SB 399 is an anti-retaliation statute targeting protected employee autonomy, and not a restriction on employer speech. They contended that SB 399 merely prohibits punishing employees who refrain from attending certain meetings.
The Court Held SB 399 Is Preempted by the NLRA
The Court, in ruling on the preliminary injunction, found that SB 399 conflicts with the NLRA in two principal ways: (1) Garmon preemption (San Diego Building Trades Council v. Garmon, 359 U.S. 236 (1959)); and (2) Machinists preemption (Lodge 76, International Association of Machinists v. Wisconsin Employment Relations Commission, 427 U.S. 132 (1976)).
Garmon preemption holds that when conduct is arguably protected or prohibited by Sections 7 or 8 of the NLRA, state and local laws must yield, and only the NLRB is empowered to regulate such conduct. If the regulated activity, such as mandatory meetings about unionization, potentially falls within Section 7 or 8 of the NLRA, states cannot act. While exceptions exist for conduct that is “peripheral” to NLRA interests or touches on “deeply rooted local interests,” these exceptions are narrowly applied.
The Court examined whether mandatory meetings about unionization are considered conduct that is “arguably protected or prohibited” under the NLRA. In a recent NLRB decision from 2024, such meetings were found to violate Section 8(a)(1) of the NLRA and were deemed impermissibly coercive—meaning the NLRA prohibited this conduct. Therefore, even though California sought to ban captive audience meetings under state law via SB 399, the NLRA covers this conduct, and only the NLRB may regulate or enforce restrictions on it. As such, the Court held that SB 399 is preempted because it regulates employer conduct that is squarely within the NLRB’s jurisdiction.
Machinists preemption precludes states from regulating areas Congress intended to leave available to the “free play of economic forces,” which includes non-coercive employer speech about unionization. The Court held that SB 399, by restricting employer speech about union issues, injects the state into a sphere Congress meant to leave unregulated and reserved for employer-employee bargaining. Accordingly, the Court concluded SB 399 was not a “minimum labor standard” where states have authority to regulate. Instead, it directly affects the balance in union organizing discussions—a subject federal law specifically leaves open for both sides to debate.
SB 399 Chills Employer Speech and Imposes Content-Based Speech Restrictions
Plaintiffs also challenged SB 399 on First Amendment grounds, alleging it constituted a content and viewpoint-based restriction on employer speech. The Court held that, although SB 399 does not outright prohibit employer speech, it penalizes employers if employees choose not to listen to covered topics. The Court determined SB 399 is a content-based restriction on free speech, triggering strict scrutiny (the highest standard of constitutional review). Under strict scrutiny, content-based restrictions must be narrowly tailored to serve a compelling state interest. The Court found that defendants failed to demonstrate a compelling interest on par with those found in civil rights cases, and that SB 399 was not narrowly tailored, sweeping too broadly and covering more than truly coercive contexts. By chilling employer speech and imposing content-based speech restrictions, SB 399 did not withstand constitutional scrutiny.
Having found a likelihood of success on both the NLRA preemption and the First Amendment claims, the Court also determined that plaintiffs would face irreparable harm absent an injunction, and that the balance of equities and public interest favored protecting constitutional rights. The Court therefore granted a preliminary injunction, enjoining California authorities from enforcing SB 399 and Labor Code section 1137 pending further order.
Effect of the Current Government Shutdown
The federal government shutdown on October 1, 2025. Generally, a federal government shutdown can impact judicial operations, but the shutdown does not automatically suspend the injunction itself. The court order remains in effect unless modified or lifted by the Court. However, it is possible that ongoing proceedings, such as hearings, further motions, or enforcement actions, could be postponed or slowed.
Key Takeaways
- For now, California cannot penalize employers for holding mandatory meetings on political, religious, or union-related matters under SB 399.
- This is the first federal court decision to reach the merits of challenges to captive audience meeting bans. This decision underscores federal preeminence in labor relations and robust constitutional protection for employer speech—even amid growing trends in state legislation aimed at workplace communications.
- While SB 399 is enjoined, employers should still be aware that mandatory meetings held by employers to discuss unionization are still prohibited under the NLRA – at least for now. Employers may nevertheless hold voluntary meetings under the NLRA provided they comply with the “safe harbor” outlined in NLRB caselaw.
