Arbitration agreements requiring employees to give up their right to take employment claims to court have been a big topic in California for a while. Employers want them, some employee groups don’t, and the cases have been all over the place. Lately, the momentum has favored employers, and it looked like carefully-drafted arbitration agreements would be enforceable. Now, however, there’s a new wrinkle, and it could be significant.
California has a group of civil rights statutes that prohibit discrimination and harassment in the provision of any goods or services based on (1) a person’s political affiliation, (2) a person’s position in a labor dispute or (3) protected characteristics such as race, sex, national origin, sexual orientation, disability, etc. A new law, AB 2617, amends those civil rights statutes and also applies to the statute that makes it unlawful to interfere “by threat, intimidation, or coercion … with the exercise or enjoyment by any individual … of rights secured by the Constitution or laws” of the United States or the State of California.
The new law means that as of January 1, 2015, businesses are prohibited from requiring a contractor to sign a pre-dispute agreement waiving his or her right to pursue a civil or administrative action “in his or her own name and on his or her own behalf” as a condition of entering into a contract for goods and services.
Additionally, AB2617 requires that any pre-dispute agreement to arbitrate or otherwise waive legal rights and remedies must (1) be knowing and voluntary, (2) be in writing and (3) include a provision that explicitly states the waiver is not a condition of the contract. The law places the burden on the person or entity that seeks enforcement of a waiver to prove it was “knowing and voluntary.” Post-dispute agreements with those conditions are not prohibited.
The law arose in reaction to a situation in which a student was bullied at school because of perceived sexual orientation. The school had a policy that required parents to waive their right to bring civil lawsuits against the school as a condition of their child’s enrollment.
This new law could be interpreted broadly enough to cover independent contractor agreements and possibly other employment agreements. If it is interpreted that way, the enforceability of arbitration agreements will become questionable again, and it may be necessary for such agreements to be revised. Just when you thought you knew what would work….
It’s too soon to tell what the impact of this new legislation will be, but it’s worth keeping a close eye on. We’ll keep you posted.
Posted by: Sarah Mott