BILL ANALYSIS Ó AB 465 Page 1 ASSEMBLY THIRD READING AB 465 (Roger Hernández) As Amended April 30, 2015 Majority vote -------------------------------------------------------------------- |Committee |Votes |Ayes |Noes | | | | | | | | | | | |----------------+------+----------------------+---------------------| |Labor |5-2 |Roger Hernández, Chu, |Harper, Patterson | | | |Low, McCarty, | | | | |Thurmond | | | | | | | | | | | | -------------------------------------------------------------------- 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. AB 465 Page 2 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. 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 AB 465 Page 3 private arbitration, entered into, altered, modified, renewed, or extended on or after January 1, 2016. 7)Provides that in addition to any other remedies available, a person who violates this section is liable for a civil penalty not exceeding $10,000 per individual for each violation of this bill and reasonable attorney's fees. 8)Makes related legislative findings and declarations 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. 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), Chapter 910, Statutes of 2014, 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. This bill is sponsored by the California Labor Federation, AFL-CIO. They state that 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 AB 465 Page 4 found a way to circumvent these avenues. Increasingly, companies are requiring 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. They argue that 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. Opponents argue that this bill directly conflicts with 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. Opponents also argue that adequate protections already exist for mandatory, pre-dispute employee arbitration agreements. Opponents contend that arbitration provides an effective and efficient means to resolve employment-related claims and that this bill will send disputes into the overburdened and underfunded judicial system. Analysis Prepared by: Ben Ebbink / L. & E. / (916) 319-2091 FN: 0000329 AB 465 Page 5