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Paul Zimmerman
pzimmerman@mrllp.com
310.299.5500

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Yet Another Threat to Arbitration

Given the choice, most California employers facing a lawsuit filed by an employee or, in the case of sexual harassment, a complaint with the Department of Fair Employment and Housing (DFEH), would pick arbitration as the favored forum for dispute resolution. Why? Because arbitration is typically a faster, more cost-effective and confidential process for litigants. Likewise, it allows for more streamlined discovery, and imposes simplified rules of civil procedure and evidence. But perhaps the most significant reason employers lean toward arbitration is that an unreasonable damage award is less likely to be levied by an arbitrator, as opposed to a jury. No wonder, then, that mandatory arbitration clauses are a fixture in employment agreements.

That being said, labor advocates suggest that forced arbitration is unfair, that contracts containing such provisions are lopsided, and that “the deck is stacked against any employee who is forced to sign one of these agreements,” especially in the wake of sexual harassment, this according to Assemblywoman Gonzalez Fletcher. Consequently, Assemblywoman Fletcher has introduced AB 3080 to the California State Legislature, a bill that, among other things, seeks to prohibit employers in California from requiring an applicant or employee to agree to arbitrate discrimination, harassment or retaliation claims as a condition of employment, continued employment, or receipt of any employment-related benefit. The proposed legislation also forbids an employee from prohibiting an employee or independent contractor from disclosing sexual harassment he or she suffers, witnesses or discovers. If the bill passes, these banned acts will be characterized as unlawful employment practices under the Fair Employment and Housing Act (FEHA), which would entitle employees to remedies for every violation.

Without question, California’s employee-friendly landscape might be getting even friendlier given the pendency of AB 3080 and other proposed bills inspired by the #MeToo movement. As they weave their way through the legislative process, we’ll be sure to keep employers posted.

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