BILL ANALYSIS Ó
AB 465
Page A
Date of Hearing: May 6, 2015
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, Chair
AB 465
(Roger Hernández) - As Amended April 30, 2015
SUBJECT: Contracts against public policy
SUMMARY: Imposes specified restrictions on contractual waivers
of rights and procedures under the Labor Code. Specifically,
this bill:
1)Provides that a person shall not require another person to
waive any legal right, penalty, remedy, forum, or procedure
for a violation of any provision of the Labor Code, as a
condition of employment, including the right to file and
pursue a civil action or complaint with, or otherwise notify,
the Labor Commissioner, state agency, other public prosecutor,
law enforcement agency, or any court or other governmental
entity.
2)Provides that a person shall not threaten, retaliate, or
discriminate against another person on the basis that the
other person refuses to waive any legal right, penalty,
remedy, forum, or procedure for a violation of the Labor Code,
including the right to file and pursue a civil action or
complaint with, or otherwise notify, the Labor Commissioner,
state agency, other public prosecutor, law enforcement agency,
or any court or other governmental entity.
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3)Provides that any waiver of any legal right, penalty, remedy,
forum, or procedure for a violation of the Labor Code,
including the right to file and pursue a civil action or
complaint with, or otherwise notify, the Labor Commissioner,
state agency, other public prosecutor, law enforcement agency,
or any court or other governmental entity shall be knowing and
voluntary and in writing, and expressly not made as a
condition of employment.
4)Provides that any waiver of any legal right, penalty, remedy,
forum, or procedure for a violation of the Labor Code that is
required as a condition of employment shall be deemed
involuntary, unconscionable, against public policy, and
unenforceable. Nothing in this subdivision shall affect the
enforceability or validity of any other provision of the
contract.
5)Provides that any person who seeks to enforce a waiver of any
legal right, penalty, remedy, forum, or procedure for a
violation of the Labor Code shall have the burden of proving
that the waiver was knowing and voluntary and not made as a
condition of employment.
6)Specifies that this bill shall apply to any agreement to waive
any legal right, penalty, remedy, forum, or procedure for a
violation of the Labor Code, including an agreement to accept
private arbitration, entered into, altered, modified, renewed,
or extended on or after January 1, 2016.
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7)Provides that in addition to any other remedies available, a
person who violates this section is liable for a civil penalty
not exceeding ten thousand dollars ($10,000) per individual
for each violation of this bill and reasonable attorney's
fees.
8)Makes related legislative findings and declarations
EXISTING LAW:
1)Establishes the California Arbitration Act which provides that
agreements to arbitrate shall be valid, irrevocable, and
enforceable, except such grounds as exist at law or in equity
for the revocation of any contract. (Code of Civil Procedure
section 1280 et seq.)
2)Similarly establishes the Federal Arbitration Act (FAA) which
provides that agreements to arbitrate shall be valid,
irrevocable, and enforceable, except such grounds as exist at
law or in equity for the revocation of any contract. (9 USC
Section 1 et seq.)
FISCAL EFFECT: None. This bill is keyed non-fiscal by the
Legislative Counsel.
COMMENTS: According to the author and the sponsor, the goal of
this bill 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. As one of the legislative findings and
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declarations contained in the bill states:
"It is the purpose of this act to ensure that a contract to
waive any of the rights, penalties, remedies, forums, or
procedures under the Labor Code, including any provision that
has the effect of limiting the full application or enforcement
of any right, remedy, forum, or procedure available under the
Labor Code, is a matter of voluntary consent, not coercion."
Therefore, this 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.
This bill largely tracks the provisions of AB 2617 (Weber),
legislation introduced last year and signed into law by Governor
Brown, which imposed specified restrictions on future
contractual waivers of rights under the Ralph Civil Rights Act
and Bane Civil Rights Act.
Criticism of Mandatory Arbitration as Essentially Unregulated
and Highly Controversial
In recent years, there have been frequent discussions as to the
merits and benefits of mandatory private arbitration as an
alternative forum to the civil justice system. Supporters of
mandatory arbitration generally assert that it is a more
efficient and less costly manner of resolving legal disputes
because they are able to limit discovery, set their own rules
for presenting evidence, schedule proceedings at their own
convenience, and select the third party who will decide their
cases.
However, critics of private arbitration have argued that it is a
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mostly anything-goes private justice industry which can be
costly and is allegedly unreceptive to consumers. There is
little if any regulation, oversight or legal accountability to
the parties or the public.
As a committee analysis of AB 2617 last year described the
situation:
"Surprisingly to some, arbitrators are not regulated in any
fashion; they need not be trained in the law, or even apply
the law in a particular dispute, or render a decision
consistent with the evidence presented to them. What evidence
is presented may, in fact, be incomplete because parties in
arbitration have no legal right to obtain evidence in support
of their claims or defenses, or the claims or defenses of the
other party, contrary to the longstanding discovery practice
in public courts. Indeed, unlike judges, arbitrators need not
explain or defend the rationale for their decisions. There is
no need to justify his or her decision because the law and the
evidence need not be followed and because there is no right
for any party to appeal or obtain an independent review of the
arbitrator's ruling unless the contract expressly so provides.
Regardless of the level or type of mistake, or even
misconduct, by the arbitrator, the most relief a court may
grant to a party in arbitration is to vacate the award and
return the parties to further arbitration, perhaps with the
same arbitrator or arbitration company. The grounds on which
an arbitrator's decision may be vacated, however, are
extremely narrow and the standards for vacatur are stringent.
Neither may the parties generally obtain any remedy against
the arbitrator for misconduct because arbitrators are afforded
substantial if not absolute immunity from civil liability for
acts relating to their decisions, even in the case of bias,
fraud, corruption or other violation of law."
In particular, critics of mandatory arbitration point to the
following reported limitations of existing law:
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Existing law provides that trial by jury is an inviolate
right and shall be secured to all. (Cal. Const. Article 1,
Section 16.)
Existing law permits arbitrators to disregard the law
and/or the evidence in rendering their decisions. Awards
may be enforced by the court, even if they are legally and
factually erroneous. (Moncharsh v. Heily & Blase et al
(1992) 3 Cal.4th 1.)
Existing law allows private arbitrators to issue binding
decisions that are legally enforceable but essentially not
reviewable by a court; there is no appeal from an
arbitrator's decision to a public court unless the
arbitration agreement expressly provides for judicial
review. (Crowell v. Downey Community Hospital Foundation
(2002) 95 Cal. App. 4th 730; Cable Connection, Inc. v.
DIRECTV, Inc., 44 Cal. 4th 1334 (2008).)
Existing law permits enforcement of private arbitration
agreements that preclude not only access to the courts but
also access to other governmental bodies responsible for
enforcing state laws, such as administrative complaint
procedures regarding employment laws. (Sonic-Calabasas A,
Inc. v. Moreno, 174 Cal. App. 4th 546 (2009), rev. granted,
99 Cal. Rptr. 3d 866 (2009).)
Existing law allows arbitrators to conduct arbitrations
without allowing for discovery, complying with the rules of
evidence, or explaining their decisions in written
opinions. (Code of Civil Procedure Sections 1283.1,
1282.2, 1283.4.)
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Existing law permits arbitrations to be conducted in
private with no public scrutiny. (Ting v. AT&T (2002) 182
F.Supp. 2d 902 (N.D. Cal.), affirmed, 319 F.3d 1126 (9th
Cir 2003).)
Existing law allows arbitrators substantial if not
absolute immunity from civil liability for acts relating to
their decisions, even in the case of bias, fraud,
corruption or other violation of law. (Baar v. Tigerman
(1983) 140 Cal. App. 3d 979.)
Existing law limits the relief that a court may grant to
a party in arbitration, no matter what misconduct has taken
place in the arbitration, to potential vacatur of the award
and returning the parties to further arbitration, perhaps
with the same arbitrator or arbitration company. The
grounds on which an arbitrator's decision may be vacated
are narrow and the standards for vacatur are high. (Code
of Civil Procedure Section 1282.6.)
"Take It Or Leave It" - Mandatory Arbitration in the Employment
Context
The use of mandatory arbitration to settle employment claims has
steadily risen since the early 1990s. In 1991, the United
States Supreme Court decided Gilmer v. Interstate Johnson/Lane,
Corp., 500 U.S. 20 (1991). That case involved a suit brought by
an employee alleging age discrimination by the employer in which
the employer moved to compel arbitration on the basis of a
pre-dispute agreement to arbitrate. In Gilmer, the Court noted
that parties may agree to arbitrate statutory claims via an
enforceable agreement, thereby explicitly holding that
pre-dispute agreements to arbitrate were both legitimate and
enforceable.
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Most commentators point to the Gilmer decision as "opening the
floodgates" to the use of mandatory pre-dispute arbitration
clauses in employment. In 2010, 27 percent of U.S. employers
reported that they required arbitration of employment disputes -
covering over 36 million employees. This percentage is likely
even higher today.
Critics contend that forced waivers (including mandatory
arbitration) of workplace claims are anathema to our public
justice system because they eliminate important procedural
guarantees of fairness and due process that are hallmarks of our
judicial system. These clauses are often buried in the fine
print of employment applications, employee handbooks and
manuals. As a result, it is nearly impossible for an employee
to evaluate and make an informed choice about the
appropriateness of a resolution mechanism prior to the existence
of an actual employment dispute.
Moreover, mandatory arbitration is generally imposed or required
as a condition of employment. Employers often condition an
employee's ability to obtain or keep a job on their "agreement"
to submit claims which otherwise could have been presented in
the civil court system to arbitration. In mandatory arbitration
situations, an employee's job may depend on accepting such a
provision - the only other choice is generally not to take the
job.
Even employees who refuse to sign such clauses face almost an
impossible situation. As one case involving an employee in
Alabama has been described:
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"[Fonza] Luke, a mother of four and a grandmother, started
working as a licensed nurse practitioner for Baptist Health
Systems (BHS) at its Medical Center in 1971. In November 1997,
she was told she must sign a form agreeing to the company's
new "Dispute Resolution Program," which relegated employees to
arbitration to seek redress for legal claims. Luke did not
want to forfeit her rights. Despite twice being told that she
would be fired if she did not sign the agreement, she refused
to sign it. Three years later, Luke was fired for
"insubordination" after almost 30 years of working for BHS
with high performance ratings. As a 59-year-old
African-American woman, Luke believed she was fired due to her
race and age, so she filed claims with the U.S. Equal
Employment Opportunity Commission (EEOC) and then in federal
court. Even though she had never signed an agreement calling
for her to settle disputes in arbitration, BHS asked the
federal court to dismiss her court case on the basis of the
company's arbitration policy. The federal court said that BHS
could force her to arbitrate because she remained in her job
after company officials presented the arbitration agreement to
her. A federal appeals court ordered her into arbitration.
According to her lawyer, it was impossible for Luke to get an
unbiased arbitrator. As a result, her claims of discrimination
and retaliation were denied, and she got no relief
whatsoever."<1>
The issue has also been highlighted in a recent well-publicized
case involving allegations of sexual harassment at American
Apparel. As a recent New York Times story<2> stated:
"The real lesson from the ouster of Dov Charney at American
--------------------------
<1>
http://www.fairarbitrationnow.org/issues/employment-arbitration/
<2>
http://dealbook.nytimes.com/2014/07/15/arbitration-clauses-let-am
erican-apparel-hide-misconduct/?_r=1
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Apparel is the danger of arbitration clauses.
That may not seem obvious given the bitter battle for control
of the retailer and the accusations of sexual harassment.
But if American Apparel hadn't been able to use arbitration
and confidentiality clauses to keep investors and the public
in the dark over those accusations, Mr. Charney would most
likely have been shown the exit some years earlier?
?But had the board not been so aggressive in using arbitration
clauses to American Apparel's advantage, it would have been
forced to act years sooner.
The company required that all employees sign agreements
requiring them to arbitrate any disputes, including sexual
harassment claims.
The purpose of these clauses was clear: to ensure that any
dispute was kept quiet and protect the company from excessive
damages. It certainly didn't appear to benefit employees.
American Apparel required that the entire proceeding -
including the outcome - be kept confidential. Employees were
also contractually barred from disparaging or otherwise say
anything bad about Mr. Charney or American Apparel. As if this
were not enough, employees also were required to agree not to
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speak to the news media without the approval of American
Apparel?
?American Apparel's conduct in quieting its sexual harassment
problem raises the bigger issue with these clauses. Companies
in the United States are rushing to force employees into
arbitration over all disputes, particularly those as salacious
as sexual harassment. Corporate America has been ably aided by
the Supreme Court, which has repeatedly upheld the right of
companies to enforce arbitration agreements.
It would seem to be a big win for companies because they get
to easily dispose of frivolous lawsuits and keep quiet more
damaging ones. The American Apparel experience shows the
consequences - not just for employees, but the companies
themselves and their investors."
The "Repeat-Player" Problem
Another common criticism is that not only is private arbitration
effectively unregulated, it is a revenue-driven system where,
opponents contend, "repeat players" have unfair advantages when
they are involved in mandatory arbitration against "one-shot"
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users, such as individual consumers. In the employment context,
employers craft the terms of the forced arbitration provisions
and typically select the arbitration services providers for the
dispute. This creates a "repeat player advantage" that favors
employers utilizing the same provider to resolve their
employment disputes and disadvantages individual employees who
are one-time participants in the process.
Questions of Federal Preemption Under the Federal Arbitration
Act
The Federal Arbitration Act (FAA) (9 U.S.C. Sec. 2) provides
that an arbitration agreement shall be valid, irrevocable, and
enforceable, except on such grounds as exist at law or in equity
for the revocation of any contract. Opponents have raised
concerns that the restrictions on waivers in this bill may be
preempted by federal law. In a coalition letter, they write:
"The Federal Arbitration Act (FAA) and the California
Arbitration Act (CAA) evidence a strong preference for
enforcement of arbitration agreements, so long as the
underlying contract is fair?
?In 2011, the U.S. Supreme Court in AT&T Mobility LLC v.
Concepcion, 131 S.Ct. 1740 (2011) held that the Federal
Arbitration Act prohibits states from conditioning the
enforceability of an arbitration agreement on the availability
of class wide arbitration procedures as such a requirement
would be inconsistent with the intent of the FAA. While the
arbitration agreement at issue was included in a sales
contract, the ruling has been applied to employment agreements
in California.
Specifically, in 2013, the California Supreme Court reversed
its initial ruling in Sonic-Calabasas A, Inc. v. Moreno, 57
Cal.4th 1109, and held an arbitration agreement that requires
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an employee to waive his or her administrative "Berman
hearing" before the Labor Commissioner is not per se
unconscionable and precluding such a waiver would frustrate
the intent of the FAA. Specifically, the Court stated "[i]n
light of Concepcion, we conclude that because compelling the
parties to undergo a Berman hearing would impose significant
delays in the commencement of arbitration, the approach we
took in Sonic I is inconsistent with the FAA. Accordingly, we
now hold, contrary to Sonic I, that the FAA preempts our
state-law rule categorically prohibiting waiver of a Berman
hearing in a predispute arbitration agreement imposed on an
employee as a condition of employment." Id. at 1124. "[T]he
fact that arbitration supplants an administrative hearing
cannot be a basis for finding an arbitration agreement
unconscionable." Id. at 1146 (emphasis added).
[This bill] directly conflicts with these prior and recent
rulings from both the California and United States Supreme
Courts, which have consistently stated any state law that
interferes with the Federal Arbitration Act is preempted. We
believe [this bill] would ultimately be found to be preempted
as well. However, the time, cost and uncertainty created for
all California employers while any legal challenge to [this
bill] is pending in the judicial system would be detrimental
to businesses and unnecessary."
Proponents respond that this bill is not arbitration-specific
because it applies to any waiver of legal rights or procedures
under the Labor Code, regardless of how that waiver is effected.
Moreover, supporters note, the bill does not single-out
arbitration or other waiver agreements for special encumbrances,
but simply recognizes the application of a general contract law
principle of unconscionability, just as courts routinely apply
this same principle to invalidate some arbitration or other
waiver agreements. In addition, supporters argue, this bill
does not bar arbitration or other waiver agreements; it simply
makes it unlawful to seek an unknowing and involuntary waiver of
rights or procedures regarding labor laws prior to a dispute
arising. Proponents point out that there is no state or federal
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policy favoring involuntary waiver or arbitration agreements.
If this bill is pre-empted, it would seem that the FAA would
logically also then pre-empt courts from applying
unconscionability principles to any arbitration or other waiver
agreement.
ARGUMENTS IN SUPPORT
This bill is sponsored by the California Labor Federation,
AFL-CIO, which states:
"Wage theft and other labor abuses are particularly egregious
for immigrant workers but are widespread across industries for
so many low-wage workers. Workers are often required to work
off the clock, are paid only in tips, or are misclassified as
independent contractors and not even paid for all the hours
worked. Pervasive labor law violations serve to exacerbate
economic inequality and prevent workers from ever getting
ahead.
There are very few remedies available to most low-wage workers
when their rights are violated. They can file a claim to the
Labor Commissioner or they can find access to counsel through
a collective legal action. Yet employers have found a way to
circumvent these avenues. Increasingly companies are requiring
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workers to sign waivers of the right to take claims to the
Labor Commissioner or to court and instead requiring them to
take any claims to the employer's private arbitrator.
The use of mandatory arbitration agreements is increasing
dramatically. A recent article in the Wall Street Journal
reported that the number of companies that use such agreements
has risen sharply from 16% in 2012 to 43% in 2014. As they
become more common, we are increasingly seeing them in
low-wage workplaces, where immigrant workers who may not even
speak the language used in the contract are required to sign
as a condition of employment. From port truck drivers to
retail workers to car wash workers to janitors, workers across
the low-wage economy are being required to sign away their
right to engage in collect action or even just rely on state
agencies for help without even knowing they have done so.
[This bill] would provide some basic protections to these
workers. It would require that these agreements be voluntary
and not required as a condition of employment. It would
require that a waiver of rights be voluntary. Lastly, it would
prohibit employers from threatening, retaliating, or
discriminating against workers for refusing to sign such a
waiver. These are core tenets of contract law and are
consistent with the Supreme Court's direction that such
contracts should not be entered into under coercion.
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[This bill] is modeled on AB 2617 (Weber), passed in 2014 and
signed into law, which provided the same protections for these
types of waivers involving civil rights. Nothing in this bill
undermines the ability of employers or workers to voluntarily
enter into arbitration agreements. This bill simply provides a
minimal level of protection to keep workers from being coerced
into waiving basic rights."
Similarly, the Consumer Attorney of California states the
following in support of this bill:
"These forced waiver of rights clauses, sometimes referred to
as arbitration clauses, should not protect individuals
violating our labor laws by shielding their bad acts from the
public and subjecting the employees to forced, private and
secret proceedings. Unfortunately, this is exactly what
happens when civil claims are settled behind closed doors and
then confidentially swept under the rug, leaving not a shred
of case law behind for the next victim to utilize when seeking
justice. As stated by Justice Brandeis, "Publicity is justly
commended as a remedy for social and industrial diseases.
Sunlight is said to be the best of disinfectants"?
?Individuals, especially low and middle income wage earners,
who sign these clauses most often, do not know the
implications of their waiver. These clauses bar an employee
from ever going to court if they have a disagreement with an
employer that can't be resolved. Instead, you have to plead
your case to an arbitrator that the company usually selects,
using rules the company creates. Recent studies have found
evidence of arbitrator bias in favor of the employer. One
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study found that employers often strategically repeat
employer-arbitrator parings in order to obtain successful
outcomes, which has resulted in a disproportionately low
employee win rate. Nonetheless, such agreements are being
forced on individuals with increased frequency without any
direction from lawmakers on where to draw the line?
..The Supreme Court has recognized private civil lawsuits are
often necessary to supplement statutory regulation. These
suits have served to alert the legislature to problems that
otherwise would go unnoticed, prompted reform in health and
safety standards, and led to increased disclosure requirements
regarding dangerous products and services. The right to
maintain such suits, especially within the context of the
rights of employees, should be protected?
[This bill] will ensure that a contract to waive any of the
rights or procedures under the Labor Code is a matter of
voluntary consent, not coercion. This is not a sweeping bill,
but rather a narrow and specific measure aimed at protecting
the employment rights of all Californians."
Finally, the California Employment Lawyers Association (CELA)
states:
"CELA strongly supports arbitration when it is voluntarily and
knowingly agreed upon by the employee post-dispute or pursuant
to a collective bargaining agreement negotiated between
employers and unions. However, most arbitration agreements
today are imposed by employers on employees-it is not
voluntary and there is no informed consent by the employee.
Moreover, it is virtually impossible for an employee to
evaluate and make an educated choice about the appropriateness
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of a resolution mechanism prior to the existence of an actual
employment dispute.
Forced arbitration of workplace claims is anathema to our
public justice system because it occurs in secret, private
tribunals in the absence of accompanying legal safeguards,
such as a written record of the arbitration proceedings, the
right to appeal the arbitrator's decision if the law is not
applied correctly, or other guarantees that ensure a fair
process that exist in a court of law.
The practice is widespread, affecting every segment of the
workforce from minimum wage workers to our nation's service
members to highly compensated professionals who are compelled
to give up their right to go to court when they believe they
have been illegally treated in the workplace in order to get
or keep a job.
In 2010, 27 percent of U.S. employers reported that they
required forced arbitration of employment disputes-covering
over 36 million employees, or one-third of the non-union
workforce. This percentage is likely higher today and
continues to grow in the wake of court rulings that have
misinterpreted the Federal Arbitration Act (FAA), which was
enacted in 1925 to regulate voluntary arbitration agreements
between commercial parties with equal bargaining power.
Arbitration is an appropriate way to resolve disputes when it
is knowingly and voluntarily agreed to by the parties after a
dispute arises. [This bill] tries to level the playing field
so that workers are not forced into a pre-dispute binding
arbitration agreement, when the "agreement" was not, in fact,
voluntary."
ARGUMENTS IN OPPOSITION
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In addition to the arguments regarding preemption under the
Federal Arbitration Act discussed above, opponents make a number
of other arguments against this bill.
First, they state that adequate protections already exist for
mandatory, pre-dispute employee arbitration agreements:
"Specifically, in Armanderiz v. Foundation Health Psychcare
Services, Inc. 24 Cal.4th 83 (2000), the California Supreme
Court held that pre-dispute employment arbitration agreements
upon which employment is conditioned that encompass unwaivable
statutory rights are valid and enforceable as long as the
following contractual protections are included: (1) provide
for a neutral arbitrator; (2) no limitation of remedies; (3)
adequate opportunity to conduct discovery; (4) written
arbitration award and judicial review of the award; and, (5)
no requirement for the employee to pay unreasonable costs that
they would not incur in litigation or arbitration?
?Arbitration agreements that have not included these mandatory
provisions have regularly been struck down as unconscionable.
See Wherry v. Award, Inc., 192 Cal.App.4th 1242 (2011), a
court deemed an independent contractor arbitration agreement
unconscionable where it expanded the right to attorney's fees
for FEHA violations to the company and reduced the time to
file a FEHA claim from one year to 180 days. See also Ajamian
v. CantorCO2e, L.P., 203 Cal.App.4th 771 (2012) (denying
arbitration where terms that required a California independent
contractor to pay upfront costs, arbitrate in New York, and
waive statutory rights was substantively unconscionable); and
Trivedi v. Curexo Technology Corp., 189 Cal.App.4th 387 (2010)
(refusing to enforce arbitration agreement that provided a
prevailing party an attorney's fee award without imposing
limitation of recovery under FEHA). Accordingly, adequate
protections already exist in pre-dispute, mandatory employment
arbitration agreements."
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Second, opponents contend that arbitration provides an effective
and efficient means to resolve employment-related claims:
"According to the U.S. District Court Judicial Caseload
Profiler, there were 29,312 civil cases filed in California in
2014. As of June 2014, approximately 2,132 cases had been
pending in federal court in California for over three years
and the median time from filing of a civil complaint to trial
in Northern California was 31 months. Comparatively, a 2003
article in the New York University School of Law legal journal
authored by Theodore Eisenberg and Elizabeth Hill regarding
employment arbitration found that arbitration was resolved
within a year while litigation usually lasted over two years.
A 2006 study by Mark Fellows, Legal Counsel at the National
Arbitration Forum, titled "The Same Result as in Court, More
Efficiently: Comparing Arbitration and Court Litigation
Outcomes," concluded that consumers and employees actually
fare better in arbitration than in court. Fellows
specifically analyzed data from California and found that
consumers prevail in arbitration 65.5% of the time, as
compared to 61% of the time in court. In their article,
Eisenberg and Hill also found that, aside from civil rights
disputes, higher-paid employees' success rate in arbitration
was basically the same as in litigation, with equivalent
awards.
In a presentation to the George Washington University Law
School in March 2011, attorney Andrew Pincus also agreed that
the national data and evidence available demonstrate that
consumers do the same if not better in arbitration than
litigation, as one of the largest arbitration providers
documented at least 45% of consumer arbitrations result in a
damages award, while over 70% of consumer-initiated securities
arbitrations result in a recovery to the consumer. Finally, a
recent report in July 2013 published by the Heritage
Foundation titled "The Unfair Attack on Arbitration: Harming
Consumers by Eliminating a Proven Dispute Resolution System,"
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supported these findings by Fellows, concluding that
"[a]rbitration is generally faster, cheaper, and more
effective than the litigation system. It is not affected by
cutbacks in judicial budgets or the increases in court dockets
that significantly delay justice."
Therefore, opponents conclude that this bill will send disputes
into the overburdened and underfunded judicial system:
"In March 2015, in the State of the Judiciary address, Chief
Justice Tani G. Cantil-Sakauye commented that the judicial
system is still falling short in its necessary funding, which
has resulted in closed courthouses, reduced hours of service,
and reduced number of employees. This funding shortage has
significantly increased the length of time to resolve civil
lawsuits. Arbitration is a valuable alternative method to
resolve disputes in an efficient manner and should be
encouraged. Instead, [this bill] will force more employment
disputes into the already overburdened judicial system,
thereby delaying any recovery of potential wages for an
employee even longer by essentially banning any predispute,
mandatory employment arbitration agreements."
REGISTERED SUPPORT / OPPOSITION:
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Support
American Civil Liberties Union of CA
American Federation of State, County and Municipal Employees
CA Conference Board of the Amalgamated Transit Union
CA Conference of Machinists
California Employment Lawyers Association
California Labor Federation, AFL-CIO (sponsor)
California Nurses Association
California Professional Firefighters
California Rural Legal Assistance Foundation, Inc.
California School Employees Association
California State Firefighters' Association
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California Teamsters Public Affairs Council
CLEAN Carwash Campaign
Congress of California Seniors
Consumer Attorneys of California
Consumer Federation of California
Consumers for Auto Reliability and Safety
Engineers and Scientists of CA, IFPTE Local 20
International Longshore and Warehouse Union
Koreatown Immigrant Workers Alliance
Professional and Technical Engineers, IFPTE Local 21
Service Employees International Union, California
UNITE-HERE
Utility Workers Union of America
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Opposition
Associated Builders and Contractors of California
California Apartment Association
California Association of Health Facilities
California Association of Realtors
California Building Industry Association
California Business Properties Association
California Chamber of Commerce
California Employment Law Council
California Farm Bureau Federation
California Hotel and Lodging Association
California League of Food Processors
California Manufacturers and Technology Association
AB 465
Page Y
California Newspaper Publishers Association
California Retailers Association
California Trucking Association
Civil Justice Association of California
National Federation of Independent Business
Personal Insurance Association of California
West Coast Lumber & Building Materials Association
Western Growers Association
Wine Institute
Analysis Prepared by:Ben Ebbink / L. & E. / (916) 319-2091
AB 465
Page Z