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California Lawmakers Could Soon Prohibit Binding Arbitration as a Condition of Employment

Tuesday, September, 15, 2015


Binding arbitration is a part of many workplace contracts and employees agree to settle grievances through arbitration by accepting a position with a company that has this sort of policy. This could all be history for employers and employees in the state of California soon, as lawmakers debate whether or not to eliminate binding arbitration as a condition of employment.

 

On August 24th, the California State Senate passed Assembly Bill 465. The bill prohibits employers from requiring employees to arbitrate employment disputes. The bill was first introduced in February 2015 and proposed that no person be able to require another to agree to waive legal rights, penalties, forums, and procedures for employment law violations. If the bill becomes law, employees will have a right to bring civil suits against employers for discrimination, wage and hour disputes, and any other workplace claims. The bill also prohibits threats and retaliation for refusing to waive legal rights. Someone utilizing the protection of the bill would be entitled to injunctive relief and attorney’s fees.

 

The bill does not completely eliminate an employer’s ability to enforce an arbitration agreement. There are two ways it would still be possible:  An employer could ask an employee to waive the right to legal action in a knowing, voluntary, and in writing way, and it would not be permitted to be a condition of employment. An employer could also negotiate with potential employees and their legal counsel for an arbitration agreement and employment could be a condition of the signing of the arbitration agreement.

 

Lawmakers are confident very few non-executive employees would ever be willing to enter into one of the binding agreements.

 

Passing of the bill is expected to increase workplace litigation in the future.