Assembly passes bill against required workplace arbitration

SACRAMENTO -- The Assembly approved a bill that would bar employers from requiring an arbitration agreement as a condition of employment. Gov. Jerry Brown vetoed a similar measure last year.

The 45-19 vote Wednesday sends AB 51 to the Senate. Assuming the bill passes and is signed by Gov. Gavin Newsom, it would set up a likely court battle over the limits of the Federal Arbitration Act.

That case in turn could hinge on whether the law is federally preempted if no arbitration agreement is ever signed between the parties.

The opposition has been led by the California Chamber of Commerce. In March, the group named AB 51 as the very first bill on its annual "Job Killer" list.

They say the law is still preempted under the precedent set in Kindred Nursing Centers Ltd. Partnership v. Clark, 137 S. Ct. 1421, 1428 (2017). Chamber lobbyists have cited an opinion written by U.S. Supreme Court Justice Elena Kagan stating a bill to prevent arbitration contracts from being signed in the first place "fares no better" than one that attempts to act on existing contracts. Brown cited the case in last year's veto message for AB 3080, a largely identical bill.

"The use of arbitration should always be voluntary, but forced arbitration agreements are used to deny workers justice and shield bad employers from accountability and today the members of the California Assembly said, 'Enough,'" the author of last year's and this year's bills, Assemblywoman Lorena Gonzalez, D-San Diego, said in an email.

AB 51 is cosponsored by the California Labor Federation and the Consumer Attorneys of California. In emailed press releases, the consumer attorneys group president, Mike Arias, said workers can still "freely and voluntarily choose" to sign an arbitration agreement.

"But many workers will choose to take their claims to a public forum to expose the misbehavior and prevent serial harassers from harming others," Arias said.

Megan E. Walker, who defends employers as an associate with Fisher Phillips in San Diego, commented, "We've seen it time and again in California with various laws that try to make an exemption to the Federal Arbitration Act. They don't survive. Now that we have a new governor, it will be interesting to see if he signs it."

Walker said a key case is Perry v. Thomas, 482 U.S. 483, 489 (1987), which found the federal law "withdrew the power of the states to require a judicial forum." This precedent came up recently in Saheli v. White Memorial Medical Center, 2018 DJDAR 2413, in which Division 8 of the 2nd District Court of Appeal found two existing state labor laws could not make sections of an arbitration agreement unenforceable.