California Businesses can no longer force arbitration

October 12, 2019 8:43 AM

California finally bans forced arbitration at work. Millions of workers just won the right in California to sue their bosses. Gov. Gavin Newsom signed a bill Thursday that outlaws forced arbitration, a common business practice that US employers use to stop workers from suing them for sexual harassment, discrimination, and wage theft. He also signed a bill that extends the amount of time employees have to file workplace civil rights complaints under state law. Starting in January, businesses can no longer force workers to sign arbitration agreements, which are usually buried in the stack of hiring documents for new employees. These clauses, which are now common, require workers to waive their right to sue their employers for labor violations, discrimination, sexual harassment, and more. Instead, workers must resolve complaints through private arbitration, a quasi-legal forum with no judge, no jury, and nearly zero government oversight.
posted by Homo neanderthalensis (24 comments total)

I wonder if the problems with arbitration (primarily that the company gets to pick from their pool of arbiters) could be better solved with a pool of anonymous arbiters that the company does not get to pick, and that cannot be blacklisted if they rule unfavorably against the company and for the employee (or consumer vs company). After the financial meltdown in regards to the housing industry firewalls were placed between the appraisers and the banks so that they would not influence the system.
posted by garisimo at 8:58 AM on October 12, 2019 [4 favorites]

As I’ve said before, arbitration is a useful tool for inter-business contract disputes but it is totally inappropriate for situations where there is a power/resource imbalance. This is a great first step (for California) - now to get them out of consumer service agreements.
posted by Big Al 8000 at 9:02 AM on October 12, 2019 [31 favorites]

Companies insisted on forced arbitration because it was good for them--generally, they pay the arbitrators salaries and not unsurprisingly, the arbitrators find in favor of the company. The real answer is more unions representing workers. That is the only way workers have someone on their side who will fight for their interests.
posted by agatha_magatha at 9:04 AM on October 12, 2019 [12 favorites]

I completely agree that arbitration should be reformed in this anonymous way.

But I also believe that arbitration should never be compulsory under any circumstances. When a problem occurs, the option for arbitration should always be available -- during an action, choosing arbitration, mediation, or a law suit should be always valid options. Committing to arbitration in advance of any potential violation only is in the interest of the wealthier, more powerful client, even in the world where arbitration is reformed to be among completely random arbiters.
posted by tclark at 9:05 AM on October 12, 2019 [8 favorites]

The biggest challenge has been to write laws that don’t invalidate arbitration agreements altogether because the Supreme Court has said they’re legal....California’s new law gets around that barrier by making it illegal for an employer to revoke a job offer or retaliate against an employee who chooses not to sign such an agreement. If they do sign it, however, the courts will likely enforce the arbitration clause.

Ah. So...CA hasn't so much banned forced arbitration as it has banned overt retaliation if an employee opts to not agree to arbitration. I have every faith in capitalism that companies will find ways to undermine this.
posted by Thorzdad at 9:07 AM on October 12, 2019 [22 favorites]

a pool of anonymous arbiters that the company does not get to pick, and that cannot be blacklisted if they rule unfavorably against the company and for the employee (or consumer vs company)

And we can give them a cool name like "judges" or something.
posted by tobascodagama at 9:11 AM on October 12, 2019 [67 favorites]

Yeah, this is weak as piss unless backed up with a rigorous regulatory regime. The alternative, banning such clauses from employee contracts entirely, is the only sensible way to do this.
posted by howfar at 9:12 AM on October 12, 2019 [7 favorites]

So how much longer until Silicon Valley secedes from the state and forms its own "disruptive" government?
posted by trackofalljades at 9:20 AM on October 12, 2019

A disruptive government with foosball tables.
posted by SoberHighland at 9:30 AM on October 12, 2019 [2 favorites]

Here is the text of AB51, as duly passed and enacted.

I've gone through the ritual of signing a few "voluntary" opt-out arbitration agreements (ironically with legal services companies that ought to be ashamed of themselves if they were capable of such an emotion). So this provision of the new section 432.6 of the California Labor Code jumps out at me:

(c) For purposes of this section, an agreement that requires an employee to opt out of a waiver or take any affirmative action in order to preserve their rights is deemed a condition of employment.

In other words, a California employer can no longer say that your agreement to arbitration is voluntary because you had the opportunity to opt out. (Presumably they can still slip the arbitration agreement into your stack of paperwork and rely on inertia/fear to do the rest, though.)

I think this is about as toothful as it can be in the absence of new federal legislation or a radically less-terrible SCOTUS.
posted by Not A Thing at 9:31 AM on October 12, 2019 [9 favorites]

I’ve always wondered if, in order to be employed, you “voluntarily” signed as Queen Victoria (which I do from time to time), the paper would still hold up in court.

Doubleplus good on calling HN’s improved arbitration 2.0 “courts” and the arrrbiters “judges.” The only time I ever got involved in an arbitration it was nearly as corrupt as the Better Business Bureau. I cynically assume they’re mostly all like that.
posted by Gilgamesh's Chauffeur at 9:40 AM on October 12, 2019 [4 favorites]

Yeah, this is weak as piss unless backed up with a rigorous regulatory regime. The alternative, banning such clauses from employee contracts entirely, is the only sensible way to do this.

I assume there's already a Supreme Court precedent forbidding that, but if not I'm sure they'd make one up.
posted by Holy Zarquon's Singing Fish at 10:04 AM on October 12, 2019

Now do At-will employment and Just Cause firing and eviction.

California also basically planned single family use only zoning which is huge for urban planning and green new deal stuff , they’re really showcasing what an engaged and disciplined legislature can do with a lackluster executive provided the executive isn’t actively standing on their neck. (Glowers at Dauphin Coumo for not signing the bill releasing striking UAW employee’s unemployment funds they themselves paid for.)
posted by The Whelk at 10:05 AM on October 12, 2019 [11 favorites]

I assume there's already a Supreme Court precedent forbidding that, but if not I'm sure they'd make one up.

Assuming good faith reasoning, something it's becoming harder and harder to attribute to the S.Ct. but which could still happen, a federal law or, in some cases, regulation, could easily amend, limit, or repeal the FAA. In fact, the House recently passed such an act, though of course it will go nowhere in McConnell's Senate. State attempts to ban the enforcement of existing contracts containing such clauses have generally gone down in flames on supremacy grounds, in decisions of varying degrees of reasonability, but those were entirely statutory decisions. No court has held that there's a constitutional basis for a "right" to impose arbitration.
posted by praemunire at 10:15 AM on October 12, 2019 [1 favorite]

The biggest reason employers want forced arbitration is because it prevents workers from allying together in a class action lawsuit. Very few employees can afford to sue their employer individually, but if you get a few dozen or hundreds in a class action, that gets the attention of class action lawyers who can afford to go up against the corporation's expensive lawyers.
posted by JackFlash at 10:23 AM on October 12, 2019 [3 favorites]

Temporal slip they BANNED single family exclusive zoning
posted by The Whelk at 10:54 AM on October 12, 2019 [7 favorites]

Now do At-will employment and Just Cause firing and eviction.

AB 1482 was signed into law a few days earlier and includes a Just-Cause eviction provision.
posted by GameDesignerBen at 11:03 AM on October 12, 2019 [3 favorites]

No court has held that there's a constitutional basis for a "right" to impose arbitration.

The question hasn't been presented as such, and certainly not to a Court with the current balance.

The right wing of the Court has been drifting back toward Lochner, 'economic substantive due process' and 'freedom of contract' in looking to reverse the expansion of Federal power under the Commerce Clause in the 20th century, not to mention to reduce labor power and push back against LGBT rights, so who knows what could happen if a Democratic Congress manages to amend the FAA to permit states to override it.
posted by snuffleupagus at 11:05 AM on October 12, 2019 [1 favorite]

This is good. (Though it would be better if you didn't have the "option" of signing a forced arbitration contract that would be enforced. Baby steps, but in the right direction.)

I'm glad that Eloise Gómez Reyes, Lorena Gonzalez, Wendy Carrillo, Cathleen Galgiani, and colleagues made these recent bills happen and the governor didn't opposed them.
posted by eotvos at 11:32 AM on October 12, 2019 [2 favorites]

It's not a perfect, utopian change, but it's GREAT news - thank you so much for posting this, Homo neanderthalensis!
posted by kristi at 12:16 PM on October 12, 2019 [5 favorites]

if a Democratic Congress manages to amend the FAA to permit states to override it.

Hard to imagine a Dem Congress actually investing the effort to amend the FAA merely to add an anti-preemption provision. Rather, such a law would almost certainly impose substantive restrictions.
posted by praemunire at 1:54 PM on October 12, 2019

of course this passes five months after i started a new job and had to agree to an arbitration clause.

now that my name is on that piece of paper, this legislation gives me no out, right?
posted by murphy slaw at 4:11 PM on October 12, 2019

Huh, this wasn't on my radar. Cool start!

As a Californian I've been pretty... enraged by how little my Democratic Supermajority legislature backed by a Dem governor and historic budget surplus has done: We should have had a California Green New Deal this legislative season, along with state based single payer. We need these things, we can afford these things, and we have the most favorable electeds to achieve these things we are likely to get for a while. But at least we got some stuff.
posted by latkes at 5:15 PM on October 12, 2019 [1 favorite]

Meanwhile, forced arbitration by doctors to their patients, better decribed as "lowered duty of care" is still very much a thing.
posted by Fupped Duck at 7:33 PM on October 12, 2019