Northern California Record

Tuesday, December 10, 2019

Anti-arbitration proposal would expose business owners to criminal liability - and civil litigation


By Rich Peters | Aug 2, 2019

Legislativesession 1280

SACRAMENTO – Assembly Bill 51 is one of many proposed labor law bills that has reached the assembly floor in California, seemingly driving a wedge between big and small business.

Authored by Assemblywoman Lorena Gonzalez (D-San Diego), the bill would ban employers from requiring arbitration in employment contracts, and, by writing the law into the existing labor code, expose business owners to criminal liability.

“Existing law imposes various restrictions on employers with respect to contracts and applications for employment,” opens the proposed bill in regards to the current Labor Code. “A violation of those restrictions is a misdemeanor.”

Assemblywoman Lorena Gonzalez (D-San Diego) | Assemblywoman Lorena Gonzalez's website

“It would be a hardship on small business owners because they just don’t have an HR manager to do these things,” said Betty Jo Toccoli, president and advocate of the California Small Business Association. “Big business does, but small business doesn’t, so they don’t even know that they are breaking the rules until they’re fined.”

The proposed bill reads, “The Fair Employment and Housing Act (FEHA) authorizes the Department of Fair Employment and Housing (DFEH) to bring a civil action on behalf of the person who submitted the complaint upon the failure to eliminate an unlawful practice under these provisions.”

FEHA would also require the DFEH to issue a right-to-sue notice to a person who submitted the complaint, allowing them to bring an action within one year from when the department issued that notice.

The California Constitution currently requires the state to reimburse local agencies and school districts for certain costs mandated by the state. This bill would “provide that no reimbursement is required by this act for a specified reason,” it states.

“Arbitration is important to small business owners,” said Toccoli. “We’re very concerned about small business owners; we don’t want them to quit being the job creators. That’s where most people in job entry levels learn a job so that they can get ahead.”

Gonzalez proposed a similar bill (AB3080) in 2018 that was vetoed by then-Gov. Jerry Brown, who proclaimed that federal law cannot be preempted. The U.S. Supreme Court states that any attempt to ban arbitration in employment disputes is prevented by federal law.

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Organizations in this Story

California State AssemblyCalifornia Small Business Association

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