On September 15, 2021, a divided panel of the Ninth Circuit Court of Appeals decided…
IS ARBITRATION DEAD IN CALIFORNIA?
Governor Brown Has Until the End of September to Sign AB 3080
As readers of this publication know, the author has stressed the importance of legally-enforceable arbitration policies for over 25 years as perhaps the single most important protection available to employers. This is because such policies enable employers to avoid the daunting prospect of presenting the defense of a labor law claim to jurors who, as employees, are predictably unsympathetic to employers.
Second, and perhaps most important, because a jury trial frequently costs the better part of a million dollars in defense costs alone, many employers are unable to afford even this limited form of “justice.” They are instead forced to settle even defensible claims, often highly-disadvantageous terms.
By contrast, the arbitration of workplace disputes can save as much as 90 percent of the defense costs employers would otherwise incur.
Thus, it is no exaggeration to say that the distribution of a legally-enforceable arbitration policy may be the only means of real justice available to many small employers.
Unfortunately, this critical resource, one of the few still available to the besieged employer community, may soon disappear. This is because Assembly Bill 3080 recently passed the California Legislature, and awaits Governor Brown’s signature. He has until the end of September to sign the bill into law.
AB 3080 is enthusiastically-supported by the #MeToo movement, which has focused a great deal of attention on “forced arbitration” and its role in “silencing” women who have complained about sexual harassment in Hollywood and Silicon Valley. Former Fox News anchorwoman Gretchen Carlson signed one, as did former-Uber engineer Susan Fowler. Both women accused their employers of harassment, only to “discover” they had waived their right to seek legal redress in the courts after signing agreements to arbitrate workplace disputes.
According to supporters of the proposed legislation, these women were in effect “forced” into arbitration, where workers often win fewer cases and smaller awards.
Business groups are critical of the legislation, which they describe as a “job-killer.” They hope Governor Brown will veto the bill, as he did previous legislation three years ago. AB 3080 is similar to a bill that made it to the governor’s desk in 2015, which also sought to restrict workplace arbitration agreements. The governor vetoed that bill.
In any event, should AB 3080 be signed by Governor Brown, it is widely anticipated that it will be subject to legal challenge on the basis that it is preempted by federal law. This is because both the Federal Arbitration Act (“FAA”) and the California Arbitration Act, express+ a strong public policy preference for enforcement of arbitration agreements, so long as they are fair. This is due in part to the ever-increasing congestion in the courts.
In 2015, when he vetoed similar legislation, the governor explained that he wanted to await the U.S. Supreme Court’s decision in Direct TV, Inc. v. Imburgia, in order to avoid signing conflicting legislation. Significantly, in that case the Court subsequently upheld the legal right of employers to require employees to submit workplace disputes to arbitration in lieu of forcing the parties into prohibitively expensive and protracted litigation.
It is on this sequence of events that the employer community relies for its hope that the potent protection offered by arbitration policies will remain with us in October and beyond.
Jay G. Putnam is a Petaluma labor lawyer who has specialized in representing California employers for over three decades. His practice is devoted to preventing lawsuits against his clients, without sacrificing workplace authority or management prerogatives.
While no one can guarantee a future free of lawsuits, Putnam has compiled a remarkable record of success: Not one employer-client has been sued with his comprehensive system of precautions in place.
For those clients who have arrived with pending lawsuits, Putnam has established an excellent track record of success as well.
You are invited to visit Mr. Putnam’s website, where you will find in-depth discussion of the most common mistakes made by California employers, and how to avoid them. http://www.jaygputnam.com/newsletter/