Making Strides in California: AB 465
October 26, 2015In August, the California legislature had passed a bill (AB 465) which would have prohibited most employers from requiring employees to sign off on arbitration agreements as a condition of employment. This bill would have required employers with ADR programs with a mandatory arbitration element to update their current programs so that it was not a requirement of hiring or maintaining your employment. Any new programs would have to be drafted accordingly. Furthermore, the bill was designed to shift the burden of proof back to employers to show that the signed agreements that they had were signed voluntarily and knowingly. This bill was passed on Governor Jerry Brown to act on.
On October 11, 2015, Governor Brown of California vetoed AB 465. This decision is a huge win for employers and for arbitration in general. It was clear from reviewing the components of the bill that the provisions would be in direct conflict of the Federal Arbitration Act. (FAA) However, in the interim, the bill would have caused a lot of unnecessary litigation and opened the door for other states to endeavor to circumvent the FAA. The veto of AB 465 is a step in the right direction for advocates of arbitration and additional acknowledgment from California of the authority of the FAA.
It is significant to note that even in light of AB465 being vetoed employers must make sure that arbitration programs and agreements are properly drafted. This is true for employers outside of California as well. Making sure any arbitration program is properly maintained and drafted is a key element in making sure employers are properly protected from frivolous employment lawsuits as other legislative changes and guidelines will continue to develop in upcoming years.