Arbitration Restrictions Aim to Protect California Workers

In October 2019, Governor Gavin Newsom passed a bill banning employers from using forced arbitration agreements. While the policy faces a temporary block in court, AB 51 is another victory for the Golden State’s labor force. AB 51 is in response to several U.S. Supreme Court rulings expanding arbitration agreement and its application in the employment setting. Decisions from the U.S. Supreme Court, that have been followed and adopted by California courts made it difficult if not impossible for employees who signed arbitration agreement to sue their employers in Court over employment disputes such as wrongful termination, discrimination, sexual harassment and wage disputes. The most recent ruling from the U.S. Supreme Court, in a 5-4 split decision, expanded arbitration agreements to prevent employees from filing class actions against their employers.

Many employers claim arbitration is a quicker and cheaper option to traditional litigation. While that may be true amongst sophisticated individuals in business, that’s not the case in resolving disputes between employees and employers. Allowing employees to sue their employer in court gives them an opportunity to have a fair trial to be adjudicated amongst their peers and not a hired their party “neutral” who is being paid by the employer.

Making it hard to read between the lines

Some employers slip arbitration clauses inside their onboarding documents. These provisions can prevent workers from taking employers to trial and instead force them to submit their dispute to arbitration. Since arbitration is a quasi-legal forum, there are no judges, juries or government oversight holding employers accountable. Sadly, this can make it easier for employers to continue unlawful practices despite pushback from workers.

But California’s new arbitration policy makes it illegal for employers to revoke job offers or retaliate against workers who refuse to sign arbitration agreements.

Workers deserve due process

Money and power still dominate the relationship between employers and employees today. But California is taking the right steps forward to level the playing field. If workers find their employer is forcing them into an arbitration agreement, they have help on their side.