Are Mandatory Employment Arbitration Agreements About to Be History in California?
This may be the case. California's Legislature has passed a bill (AB 465) to ban employers from requiring applicants and employees to agree to arbitrate employment disputes as a condition of employment or continued employment. That bill is now headed to the Governor's desk to sign or veto. If signed into law, it will become effective January 1, 2016 and will apply to all agreements entered into, modified, altered, renewed, or extended on or after that date. Under the new law, applicants and employees would still be permitted to “knowingly and voluntarily” agree to arbitrate employment disputes, but an employer would not be able to mandate agreement to arbitration as a condition of employment. Additionally, even in the case of a knowing and voluntary agreement to arbitrate, the burden would be on the employer to prove that the applicant or employee's agreement was actually knowing and voluntary.
As California employers know, there are many benefits to arbitration (in lieu of court) as a forum for resolving employment disputes and, if signed into law, this bill will make it much more difficult for employers to enter into arbitration agreements with employees as well as to successfully enforce such agreements. Employers will also lose an effective tool for preventing abusive class action lawsuits against them in California. Employers are urged to write the Governor's Office to encourage a veto of this legislation.