“To Agree or Not to Agree, That is the Question” – California’s AB51 Mandatory Arbitration Agreements in Employment

“To Agree or Not to Agree, That is the Question” – California’s AB51 Mandatory Arbitration Agreements in Employment
By Angela Reddock-Wright, Esq., Employment Law Attorney, Mediator, Arbitrator

Arbitration Agreements in employment?  What are they?

Arbitration is a form of “Alternative Dispute Resolution” (ADR) which provides parties with the opportunity to resolve their disputes before an arbitrator as opposed to a court or jury.  Arbitration and other forms of ADR were intended as a method to streamline the time, costs and process of resolving a case.

The Issue

In California, many employers require that workers agree to have any disputes related to claims of discrimination, harassment and other employment claims addressed in arbitration rather than in court.  To accomplish this goal, many employers require employees to sign what is called a Mandatory Arbitration Agreement.  By signing a mandatory arbitration agreement, employees agree to waive their right to a jury trial and to pursue any claims they may have against their employer in arbitration.

California’s New Law – AB 51

In 2019, California passed Assembly Bill (AB) 51.  This law bans certain mandatory arbitration agreements in California so that workers retain their right to sue in court regarding issues like discrimination and harassment as well as violations of wage and hour requirements (such as paid rest breaks).

AB51 does not automatically invalidate arbitration agreements.  Rather, the law protects employees who refuse to sign a mandatory arbitration agreement from being fired or disadvantaged in a hiring process because they refuse to sign.  Individuals can be entitled to monetary relief, attorney’s fees, and reinstatement; meanwhile, the employers could be subject to criminal penalties as well as up to 6 months of imprisonment.

Current Status of AB51

AB51 was supposed to go into effect on January 1, 2020, but was designed to apply only to new employment agreements – any mandatory arbitration agreements already in effect would not be impacted.    However, the law is currently being challenged in the courts and a temporary injunction has been issued which places a hold on the implementation and enforcement of the new law.

STAY TUNED for more developments!

DISCLAIMER: Nothing in this blog, written materials or otherwise is intended as legal advice by the Reddock Law Group, Managing Partner Angela Reddock-Wright or any person associated with the firm.  This blog is intended for educational purposes only.  The Reddock Law Group does not represent clients in legal matters.  We are a full-service mediation, neutral, investigations and alternative dispute resolution firm. For legal advice, please contact a licensed attorney with experience in employment law.