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FMG Law Blog Line

Employment Arbitration Agreements are Still Alive in California, At Least For Now

Posted on: October 4th, 2018

By: Rebecca Smith

As Freeman Mathis & Gary brought out in its August 24, 2018 Blog by attorney Dave Daniels, the California Senate had voted to approve Assembly Bill 3080 (“AB 3080”) intended to combat the use of mandatory arbitration agreements and confidentiality clauses to prevent the public disclosure of workplace sexual harassment.  September 30, 2018 was the last day for Governor Brown to sign or veto legislation passed by the California Legislature this year.  Included in the last day of vetoes, Governor Brown vetoed AB 3080.

AB 3080 sought to amend the California Fair Employment and Housing Act and the California Labor Code making it an unlawful employment practice to require an applicant, employee or independent contractor to agree to arbitrate claims arising under the Fair Employment and Housing Act and Labor Code.  AB 3080 would also have added Section 432.4 to the Labor Code, which would have barred any person from prohibiting an applicant, employee, or independent contractor, “as a condition of employment, continued employment, the receipt of any employment-related benefit, or as a condition of entering into a contractual agreement,” from “disclosing to any person an instance of sexual harassment that the employee or independent contractor suffers, witnesses, or discovers in the workplace or in the performance of the contract.”

In returning the bill unsigned, Governor Brown pointed to several recent court decisions that invalidated state policies which unduly impede arbitration.  “The direction from the Supreme Court,” Governor Brown indicated “has been clear – States must follow the Federal Arbitration Act and the Supreme Court’s interpretation of the Act.”  “Since this bill plainly violates federal law,” Governor Brown indicated in this statement, “I cannot sign this measure.”

So, at least for the time being, California Employers are still able to use arbitration agreements as long as they are drafted with care.  Employers should review all arbitration agreements and practices to ensure that the agreements they are using will withstand challenge, or to update their agreement to comply with recent authorities addressing arbitration agreements.  Additionally, this will, in all likelihood not be the last challenge which will be made to arbitrations in the employment context in California as bills similar to AB3080 have previously been introduced and undoubtedly will be introduced again in the future.

If you have any questions or would like more information please contact Rebecca Smith at [email protected].

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