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Governor Brown Vetoes Controversial AB 465

On October 11, 2015, Governor Brown vetoed the controversial AB 465, legislation that attempted to make a sweeping prohibition of all mandatory arbitration agreements as a condition of California employment. AB 465 required that any waiver by an employee must be knowing, voluntary and in writing, and could not be an express condition of employment.

In his veto memo, Governor Brown stated that “a blanket ban on mandatory arbitration agreements is a far-reaching approach that has been consistently struck down in other states as violating the Federal Arbitration Act.” Further, Brown noted that the United States Supreme Court has currently granted certiorari to hear arguments in both MHN Government Services, Inc. v. Zaborowski and DIRECTV, Inc. v. Imburgia, two cases with California origins that involve mandatory arbitration agreements.

Had it been enacted, AB 465 would have prohibited employers from requiring that employees sign arbitration agreements. For now, employers can continue to require new hires to enter into binding mandatory arbitration agreements. Employers should ensure they are complying with the arbitration requirements articulated in the Supreme Court of California’s decision in Armendariz v. Foundation Health Psychcare Services, Inc.; those protections include having a neutral arbitrator, a provision for adequate discovery, a written decision for judicial review, and limitations on the cost of the arbitration. 

This article is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.