What good is a law designed to protect your rights in the workplace if your employer can coerce you into waiving those rights as a condition of employment? Not much good at all. But the good news is that a recent bill passed by the California Legislature will prevent unscrupulous employers from strong-arming workers into waiving important rights.
AB 465, which is awaiting the Governor’s signature, would ban the practice of requiring workers to waive any of their rights, forums and procedures guaranteed by the California Labor Code. The “forum and procedures” language is critical, because it targets the widespread practice of forcing employees to sign mandatory arbitration clauses. Ending this abusive tactic is at the heart of what AB 465 seeks to accomplish.
Arbitration clauses are everywhere: in credit card agreements, in hospital admission forms, and in any number of lengthy, legalistic documents you routinely sign without bothering to read. But arbitration clauses have become especially prevalent in the workplace. Under current California law, your employer can fire you if you refuse to agree to submit all of your employment-related disputes to arbitration.
What’s wrong with arbitration? Nothing at all, if the decision to arbitrate is made knowingly and voluntarily by all parties. But coerced arbitration is inherently unfair to the employee and skews the balance of power further in the direction of the employer. Instead of having your dispute heard by a court or state agency – institutions relatively immune to undue influence by the employer – your case will be decided by an individual paid by the employer, pursuant to a process designed by the employer or by the arbitration provider selected by the employer.
Do you want to go to the Labor Commissioner or other state agency over wage, working conditions or occupational safety issues? Too bad. You’ve agreed to private arbitration. Do you want to band together with co-workers and file a class action to address wage theft, misclassification, or other issues best decided on a collective basis? Too bad. And if you’re an immigrant worker with a limited command of English, you may not even know that you’ve agreed to private arbitration. Again, too bad. Still enforceable.
But not if Governor Brown signs the bill. If it becomes law, this bill will prevent employers from coercing you to waive any right guaranteed by the California Labor Code as a condition of employment, including your right to take your employer to court or file a complaint with a government agency.
This bill doesn’t solve all the problems workers face in the world of mandatory arbitration since it only applies to Labor Code violations. That means it does not apply to workplace anti-discrimination provisions, which are part of a separate Code. You can still be fired for refusing to submit your discrimination, retaliation or harassment claims to arbitration. For now.
Mandatory arbitration may be an idea whose time has come and is now, finally, going. Last year, the California Legislature passed a bill prohibiting mandatory waivers of the right to go to court for certain “hate crimes.” President Obama signed an Executive Order prohibiting employers with federal contracts from requiring their employees to sign mandatory arbitration clauses. AB 465 is an important next step in what workers’ rights advocates hope will be the dismantling of the mandatory arbitration machine employers have constructed.