Oct. 2, 2018 – – The past legislative session saw many bills attempting to address the issue of sexual harassment in the workplace. One of those measures would prohibit arbitration agreements in all employment contracts. Assembly Bill 3080 (Gonzalez Fletcher), has been vetoed by Governor Brown. AB 3080 would have prohibited non-disclosure agreements regarding sexual harassment, as well as ban arbitration agreements for any alleged violation of the Labor Code or the Fair Employment and Housing Act in the Government.
Labor and employment laws can be equally enforced in arbitration as they can in court because arbitration only specifies the forum in which the dispute is resolved. It does not result in any diminution in an employee’s substantive rights. This is the fundamental claim of the proponents of banning arbitration, but it is not factually correct. For example, when arbitration agreements attempted to ban punitive damages, or shorten a statute of limitations, those were all struck down by California courts.
The bill was not limited to sexual harassment claims. Rather, the bill would have applied to all claims made under the Labor Code and the Fair Employment & Housing Act in the Government Code. This makes AB 3080 much broader than a similar bill vetoed by Governor Brown in 2015 (AB 465, Hernandez).
Opponents argued that AB 3080 would violate federal law by precluding arbitration agreements in all employment disputes. The U.S. Supreme Court has repeatedly struck down state legislation that prohibits, restricts or interferes with arbitration agreements. Additionally, they argue the legislation precludes settlement agreements of any claim under the Labor Code and FEHA that include a waiver. Precluding the informal resolution of civil claims would likely overwhelm California’s judiciary by forcing all claims to be tried by a jury or judge, creating significant delays that would harm individuals who have suffered a wrong. It could have also impacted low wage workers who may not have claims large enough to provide incentive to incentivize plaintiff attorneys to sue in court.