Bill to ban forced arbitration, vetoed by Brown, is getting another chance

A bill to ban forced arbitration in the workplace advanced through a key Assembly Committee on Tuesday -- again.

AB 51 is among the highest profile examples of a bill vetoed by former Gov. Jerry Brown that supporters have brought back this year, hoping for a better reception from new Gov. Gavin Newsom. The legislation is substantially similar to AB 3080, a bill Brown vetoed last year because of what he said was a conflict with the Federal Arbitration Act.

Jennifer Barrera, a lobbyist with the California Chamber of Commerce, said Brown made the right move.

"The issue of arbitration and the Federal Arbitration Act is one I feel we have on an annual basis here in this committee," Barrera told the Assembly Judiciary Committee. "Not much has changed from last year when we had this discussion except there have been more cases decided by the U.S. Supreme Court emphasizing the strength and broadness of the Arbitration Act and its preemption."

The act, passed in 1925, contains a provision that prevents states from invalidating arbitration agreements. Supporters of AB 51 have contended that if no agreement is ever signed, because the law would prevent employers from demanding these agreements, then preemption is averted.

Brown, in his veto message, and Barrera at the hearing both cited the same case they say disproves this theory: Kindred Nursing Centers Ltd. Partnership v. Clark, 137 S. Ct. 1421, 1428 (2017). In his veto message, Brown wrote that U.S. Supreme Court Justice Elena Kagan shot down the theory.

"A rule selectively finding arbitration contracts invalid because improperly formed fares no better under the act than a rule selectively refusing to enforce those agreements once properly made," Kagan wrote.

Assemblywoman Lorena Gonzalez, D-San Diego, is the author of both AB 51 and AB 3080. She said those making preemption arguments neglect to mention the involuntary nature of arbitration as a condition of employment.

"What's missing is the coercion piece," Gonzalez said. "Consent to go into arbitration should always be on the table. Even in disputes, it should be something that a worker can enter into if they don't want to sue."

Gonzalez cited her early career in the labor movement as a reason she continues to push her bill despite setbacks. She is a former CEO of the San Diego and Imperial Counties Labor Council, AFL-CIO.

The bill passed on a 9-2, largely party line vote. One supporter said he is willing to continue to test the legal limits of the Arbitration Act.

"There may be litigation," said Assemblyman Ash Kalra, D-San Jose, an attorney. "We'll let the courts decide."

Gonzalez also accepted several amendments to the bill from the committee. The new language will specify that AB 51 is not intended to invalidate any existing arbitration contracts, nor to "apply to post-dispute settlement agreements or negotiated severance agreements."