Employment Arbitration Agreements May Be Gone!
Nationally, the courts in the past have upheld or changed arbitration agreements so many times who can keep up with it! Now, another dagger has been thrust through the hearts of employers who continually tried to avoid the high cost of litigation.
Recently, California’s Legislature has passed a bill (AB 465) to ban employers from requiring applicants and employees to agree to arbitrate employment disputes as a condition of employment or continued employment. That bill is now headed to the Governor’s desk to sign or veto. If signed into law, it will become effective January 1, 2016 and will apply to all agreements entered into, modified, altered, renewed, or extended on or after that date. Under the new law, applicants and employees would still be permitted to “knowingly and voluntarily” agree to arbitrate employment disputes, but an employer would not be able to mandate agreement to arbitration as a condition of employment. Additionally, even in the case of a knowing and voluntary agreement to arbitrate, the burden would be on the employer to prove that the applicant or employee’s agreement was actually knowing and voluntary (and of course employees will argue they were coerced).
As California employers know, there are many benefits to arbitration (in lieu of court) as a forum for resolving employment disputes and, if signed into law, this bill will make it much more difficult for employers to enter into arbitration agreements with employees as well as to successfully enforce such agreements. Employers will also lose an effective tool for preventing abusive class action lawsuits against them in California.
Finally, as we know, California has a tendency to be a “trend setter.” If this goes into law it is without question that we will see this as an issue nationally.
Minimum Wage Increase Has Died – For Now
State Senator Mark Leno’s attempt to further increase the California minimum wage starting on January 1, will not be successful. Currently, California’s minimum wage is $9.00 an hour. It is currently slated for an 11.1 percent increase at the end of this year, when it will move to $10.00 an hour. Earlier in this legislative session, San Francisco based Senator Mark Leno introduced Senate Bill 3, which if successful would have raised the minimum wage to at least $11.00 an hour at the end of this year (effective January 1, 2016) and at least $13 an hour on July 1, 2017. These would be major increases and would have applied broadly to all California employers. In addition, the bill would have required automatic raises to the minimum wage tied to the cost of living after 2017.
In June, the California State Senate passed the bill by a 23 to 15 vote. The bill was moving forward in the Assembly until yesterday, when it stalled at the Assembly Appropriations Committee, after discussions. As a result of yesterday’s development, it is highly unlikely that there will be any legislative changes to the state minimum wage in this session. Therefore, the only statewide increase will be the change on January 1, when the minimum hourly wage goes to $10 an hour. However, many municipalities in California have already passed their own minimum wage legislation (San Francisco, Oakland, Los Angeles, Emeryville), with much higher requirements. In addition, other cities are currently debating whether or not to enact their own minimum wages (Sacramento, Santa Monica, West Hollywood) and we expect more action on the municipal level in this area.
We will continue to keep you abreast of all key developments on both of these far reaching developments.