Northern California Record

Wednesday, January 22, 2020

Signing of arbitration bill is a 'shame' and will be nixed, according to Employment Law Council attorney

Attorneys & Judges

By Rich Peters | Oct 23, 2019


SACRAMENTO – Gov. Gavin Newsom recently signed the anti-arbitration Assembly Bill 51 into effect, a controversial labor law that may further complicate conducting business across the state. Some experts, however, believe that the bill will be overturned due to federal law which has upheld arbitration in consumer contracts. 

“It’s a shame on Gov. Newsom for signing a measure that imposes criminal penalties on California employers for doing something that is clearly allowed by California law,” said Paul Grossman, the Employment Law Council's general counsel. “It’s a terrible, terrible thing that he has done … There will be a period of uncertainty while the issue is litigated, but yes, the federal courts will hold that AB 51 is preempted by the Federal Arbitration Act.”

Authored by Assemblywoman Lorena Gonzalez (D-San Diego), the bill will ban employers from requiring arbitration in employment contracts, and, by writing the law into the existing labor code, expose business owners to criminal liabilities. Gonzalez had a similar bill vetoed by then-Gov. Jerry Brown who believed that the bill opposed federal law.

“The Fair Employment and Housing Act (FEHA) authorizes the (Department of Fair Employment and Housing) 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,” reads the signed bill.

Additionally, FEHA would require the DFEH to issue a right-to-sue notice to a person who submitted the complaint and allow them to take legal action within one year from when the department issued that notice.

Current law 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.”

“What Gov. Newsom and the legislature have done is to just create some litigation and the outcome of the litigation is not in doubt,” said Grossman.

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