Approved by the Legislature on August 27, 2015, AB 465 would prohibit California employers from requiring most individuals to enter into arbitration agreements as a condition of their employment
According to the bill's sponsor, the goal of AB 465 is to protect workers from being coerced into signing contracts to waive the right to take labor violations to the Labor Commissioner or to court and submit all claims to the employer's arbitrator. Accordingly, the bill is designed to ensure that waivers of important employment rights and procedures arising under California law are made voluntarily and with the consent of the employee.
If enacted, the bill would make such waivers, including, presumably, class action waivers that were expressly sanctioned by Concepcion, “involuntary, unconscionable, against public policy, and unenforceable” if made a condition of employment. The bill also would make it unlawful to threaten, retaliate, or discriminate against any person who refuses to sign such a waiver.
For years, California employees have primarily relied on the doctrine of unconscionability to argue against the enforceability of arbitration agreements. This argument typically requires two things:
- A showing that the agreement is procedurally unconscionable, meaning that there was some unfairness in the procedure or method in which the agreement was presented to the employee;
- A showing that the agreement was substantively unconscionable, meaning that its terms were overly harsh or one-sided.
AB 465 provides that arbitration agreements, and other waivers of legal rights, must be “knowing and voluntary and in writing, and expressly not made as a condition of employment.” This would represent a shift in California law as it would allow employees to invalidate arbitration agreements without a showing of both procedural and substantive unconscionability. In addition to this change, AB 465 makes several other changes, including
- Placing the burden of proving that an arbitration agreement was proper on the employer,
- Making arbitration agreements required as a condition of employment per se invalid, and
- Providing employees who are successful in invalidating these types of agreements the right to recover their attorneys' fees.
AB 465 was approved by the California Senate on August 24 and approved by the full California Assembly on August 27, 2015. With its passage, the bill now goes to Governor Brown for his signature.
California Employment Law
Should AB 465 become California law, employers should be prepared to make sure that agreements to submit claims to arbitration are voluntary on their face and as a practical matter. If Governor Brown chooses not to sign the measure, employers should still make sure that their arbitration agreements are in compliance with the current state of California law.
An experienced California employment lawyer can quickly answer your questions about arbitration agreements and your rights as an employee in California. To discuss a potential claim on your behalf, feel free to contact leading California employment lawyers at Kingsley & Kingsley. Call toll-free at (888) 500-8469 or click here to contact us via email.