By: Philip A. Toomey, Esq.
On August 22, 2018, the California Legislature passed and sent to the Governor for signature Assembly Bill 3080 (“AB 3080”). The history on this bill establishes that a legislative perspective arbitration is inherently inferior to lawsuits for resolving employment claims, and results in employees having less rights or benefits than appropriate. While the Governor’s office has not publicly announced its position, it is Leech Tishman’s belief the Governor will approve the legislation.
As passed, AB 3080 prohibits, in any agreement or policy, that an applicant or employee be required to use arbitration to resolve any claims arising under the Fair Employment and Housing Act (“FEHA”) or Labor Code. AB 3080 also prevents an employer from requiring a waiver of any right to pursue or participate in employment class action lawsuits. The bill also prohibits similar waivers in settlement agreements resolving workplace disputes. Finally, an employer who requires such “prohibit waivers” violates criminal law. An employer requiring a waiver may be prosecuted.
An argument exists that AB 3080 is preempted by the Federal Arbitration Act (“FAA”). In many aspects, AB 3080 is similar to the 2014 consumer rights bill, AB 2617. AB 2617 prohibits any requirement that consumers agree to arbitrate claims in any contract for consumer goods or services. On March 14, 2018 an appellate court, in Saheli v. White Memorial Medical Center, held AB 2617 was preempted by the FAA. On June 27, 2018, the California Supreme Court decided not to review Saheli. At the same time, the California Supreme Court, in its July 26, 2018, opinion in Troester v. Starbucks, made very clear its positive view, at least for employment claims, towards class action litigation. In any legal challenge to AB 3080, it would not be surprising for an appellate court to determine that California public policy requires a different conclusion on preemption for employment claims than for consumer claims. A definitive answer on this question will not be known for several years.
If the Governor signs the bill, which is anticipated, the use of arbitration and obtaining class action waivers for California employees will subject employers to violation of both civil and criminal law. Employers with California employees, especially multi-state employers who routinely use non-state specific policies or forms, should carefully review whether such use are now still permitted.
Leech Tishman’s Employment Practice Group can help clients ensure compliance with California’s complex and technical employment laws and can assist clients with defending against civil or administrative actions.
If you have any questions regarding California’s unique employment laws or these employment law updates, please contact Philip Toomey. Phil serves as Leech Tishman’s West Coast Business & Employment Client Relations Partner and practices in the firm’s Employment, Corporate, Litigation and Real Estate Practice Groups. Phil is based in Leech Tishman’s El Segundo, CA office. He can be reached at 424.738.4400 or email@example.com.
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Leech Tishman Fuscaldo & Lampl is a full-service law firm dedicated to assisting individuals, businesses, and institutions. Leech Tishman offers legal services in alternative dispute resolution, aviation & aerospace, bankruptcy & creditors’ rights, construction, corporate, employee benefits, employment, energy, environmental, estates & trusts, family law, government relations, immigration, insurance coverage & corporate risk mitigation, internal investigations, intellectual property, international legal matters, litigation, real estate, and taxation. Headquartered in Pittsburgh, PA, Leech Tishman also has offices in El Segundo, CA, Chicago, Los Angeles, New York, Sarasota and Wilmington, DE.