California law on mandatory arbitration is about to change. Will the new law be better or worse for employees and businesses? Do you have a bone to pick with your employer? If employment policies or practices are illegal and unfair, you may wish to pursue legal action against your employer. Starting in January 2020, that right will be afforded to you, thanks to a new bill that was just signed into law here in California.
AB 51
Governor Newsom signed AB 51 into law, prohibiting employers from requiring employees to waive their right to sue when it comes to allegations of impropriety in the workplace. This could include anything from discriminatory behavior, labor violations, sexual harassment, retaliation, and any other offenses that may be illegal. While up until now many businesses compelled employees to agree to private arbitration in lieu of a lawsuit, the new legislation eliminates forced arbitration altogether.
Understanding Mandatory Arbitration Agreements
Arbitration agreements are designed to handle workplace disputes without involving the courts. Employers generally favor them for a number of reasons:
- Arbitration is faster than a courtroom proceeding;
- Arbitration is generally less expensive than lawyer fees and court costs;
- Claims against employers never make it to a jury, avoiding massive payouts from employers.
For employees, however, mandatory arbitration can be a huge disadvantage when they have a solid case of wrongdoing. Juries are often quite supportive when it comes to the mistreatment of workers, and have been known to award hefty damages. Even the threat of a jury trial can result in higher offers from companies who wish to avoid a courtroom battle.
Is Arbitration Fair?
In some cases, arbitrators, who are themselves employed by arbitration firms, tend to have a certain amount of bias toward employers who regularly utilize them. Researchers call this the repeat player effect, and report that workers are 500% less likely to prevail against an employer who had previously used a particular arbiter. In situations when workers did win, they were paid significantly less in settlements.
A Tricky New Law
What makes the whole thing somewhat controversial is the fact that the Supreme Court has previously determined that mandatory arbitration agreements are, indeed, legal. In California, it means that, while these agreements may be offered, and may be enforced if signed, employees now have a choice when it comes to signing such an agreement. Employers may not retaliate against anyone who refuses to sign this document, and may not revoke any job offers in the event a would-be employee chooses not to sign on to such an agreement. [Read more…]