As deadline looms for bill filing, fallout from Dynamex decision, arbitration on the watch list

By John Breslin | Feb 15, 2019

SACRAMENTO - Bills barring mandatory arbitration in employment disputes are likely to be filed ahead of next week's deadline for introduction of proposed legislation in the California legislature, according to a group that campaigns against what it believes is excessive litigation.

While hundreds of bills have already been filed ahead of the Feb. 22 deadline, many more are expected to follow, said Kim Stone, interim president of the Civil Justice Association of California.

And Stone told the Northern California Record she does expect a number of arbitration bills to be in the mix, similar to ones vetoed by former Gov. Jerry Brown after the last session.

Assembly Bills 465 and 3080 would have outlawed the use of mandatory arbitration agreements as a condition of employment.

Supporters argue that the arbitration process leans far too heavily in favor of employers, while AB 3080 was characterized as a response to the #MeToo movement, with claims that the system has a chilling effect on those wanting to come forward with claims of sexual harassment.

Gov. Brown, whom Stone describes as "relatively moderate," consistently opposed the ban on mandatory arbitration, on more than one occasion, arguing they would kill jobs.

And, in his veto statement on AB 465, Brown added, "California courts have addressed the issue of unfairness by insisting that employment arbitration agreements must include numerous protections to be enforceable, including neutrality of the arbitrator, adequate discovery, no limitation on damages or remedy."

The CJAC's position is that the arbitration process for individuals is a much quicker and effective way of dealing with disputes, more so than through litigation, which largely benefits lawyers.

Stone said that it is not clear how Gov. Gavin Newsom might respond should fresh bills pass through the legislature, but added the new administration may not necessarily be supportive.

Her organization is tracking dozens of bills, with CJAC's executive committee still weighing whether to support or oppose many of them.

One of the most consequential subject that will be debated will be how to deal with the aftermath of the California Supreme Court's Dynamex decision, which adopted a radically different definition of an independent contractor.

The court found that a worker is presumed to be an employee, and eligible for benefits, unless he or she comes under the so-called ABC rule.

Under the rule, the worker has to be free from control and direction of the hirer; performs work outside the usual course of the hiring entity’s business; and is engaged in an independently established trade or occupation.

Several competing bills on this issue have already been filed - one of the very first was AB 5, which seeks to codify the Dynamex decision and clarify how it should be applied. This will be opposed by business interests and others, many deeply fearful of the impact should the decision stand without revision by statute.

One proposal, AB 233, seeks to limit the impact of Dynamex. It links insurance and licensing to the designation process. If an agreement, for example with an insurance company includes a provision stating the individual is an independent contractor, then he or she cannot then be presumed to be an employee.

Another bill being watched by CJAC, and others, is one that changes the California Fair Employment and Housing Act, which includes provisions barring discrimination against or harassment of employees and tenants.The bill extends the time to file a complaint from one to three years.

Somewhat linked, another requires a client employer "to share with a labor contractor all civil legal responsibility and civil liability for harassment for all workers supplied by that labor contractor."

While CJAC is keeping a close eye on the bills filed in the legislature - and there could be approximately 1,500 by deadline - they are also pouring through proposed new civil jury instructions.

Comments on a 130 page proposal issued by the Judicial Council of California are due by March 1.

Stone is flagging up "all of these instructions impact tort lawsuits and deserve scrutiny to make sure they accurately represent existing law." They cover insurance, negligence, product liability, and fair employment.

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