Could Forced Arbitration Agreements in Employment Contracts be Banned in California?

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According to the LA Times, employees may no longer need to give up their right to file a lawsuit against a company in a future dispute. A new bill is on its way to the desk of Governor Gavin Newsom. This bill would allow a job candidate to refuse to give up his or her right to sue without fear of a job offer retraction.

In the past, state governments have tried to stop private companies from forcing new employees to sign an arbitration agreement.  Arbitration agreements have prevented employees from suing for issues such as sexual harassment.

Is the Ban of Forced Arbitration Agreements Illegal?

Under federal law, individual states may not ban arbitration agreements. Even recent Supreme Court cases have held this to be true. Yet, supporters of the California bill argue that forced arbitration agreements would become optional but not prohibited under the new bill.

New hires could choose to sign a forced arbitration agreement but would not face punishment for refusing. The proposed California bill would only affect those hired after January 1, 2020. All existing arbitration agreements would remain in place.

Business groups in the state and Republicans claim the bill is illegal. Yet, the California State Senate voted in favor of the bill. To date, 67 percent of California employers require workers to sign arbitration agreements. Companies favor such agreements because it costs them much less in the event of a dispute. Arbitration tends to move faster than a lawsuit.

Forced Arbitration Rarely Favors Employees

Employees are often placed at a distinct disadvantage under an arbitration agreement. These agreements do not allow the employee to consult an attorney. Further, arbitrators are usually selected by the company and paid for by the company. This can place the employee at an even greater disadvantage.

California already allows employees to sue their employers on behalf of the state for violations of labor laws. Republican state senator, Shannon Grove, believes limiting forced arbitration will only increase “frivolous litigation.”

Others dispute this. They believe the bill protects employees against issues such as sexual harassment and wage theft. Democratic Senator Hannah-Beth Jackson believes businesses should only hire employees on their qualifications. They should not hire them based on whether they are willing to sign away their rights.

California lawmakers have attempted to pass such a bill at least twice before. In the past, Governor Jerry Brown vetoed the bills in 2015 and 2018.

A California Employment Attorney Can Help

Employees in the East Bay Area need a California employment attorney they can trust. At the Law Office of Christopher Baudino, our lawyers represent employees facing discrimination, harassment, and wrongful termination. We fight hard for our clients against large businesses and corporations. No company is above the law.  To protect yourself and your career, contact the Law Office of Christopher Baudino today. Fill out our confidential contact form for a free initial consultation to review all of your legal options.

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