From Dieringer Law Group:
We wish you and yours a Very Happy New Year, with lots of promise. And with these good wishes, I give you some Good Legal News!
Our State legislature was hard at work in 2019 passing lots of new laws, which is not always a good thing. One new law effective at the new year was Assembly Bill 51, or “AB‐51”, which prohibited employers from entering into arbitration agreements with their workers as a condition of employment. AB‐51 was similar to a bill that Governor Brown vetoed last year, claiming it was unconstitutional and violated Federal Law – the Federal Arbitration Act. But that did not stop the legislature from trying again this year, and this time it was signed by a new governor – Gavin Newsom.
Arbitration is a speedy and informal method to resolve employment disputes which often arise. As an employer, you have likely received some type of complaint from a worker, whether it was a miscalculation on the payroll or a claim of being treated unfairly. Ideally, that dispute was resolved directly and did not lead to litigation. If not, a written agreement to arbitrate your dispute, or other written “Dispute Resolution Plan”, can help you stay out of Court and avoid lengthy litigation. Having a good Dispute Resolution Plan allows you to do the following:
- require employees to engage in good‐faith attempts to resolve disputes directly and informally with the business first;
- waive employee class‐action claims;
- waive administrative hearings, like employee‐sided Labor Commissioner hearings for wage claims; and
- allow an option for small‐claims alternatives for low value claims;
- allow an option for mediation before arbitration, if good‐faith informal attempts fail;
- compel arbitration as a final method to resolve disputes.
But, AB‐51 prohibited businesses from entering into Arbitration Agreements with their workers as a condition of employment, forcing businesses and workers into costly and burdensome litigation to resolve even simple disputes. Thankfully, in December a coalition of employment groups led by the Chamber of Commerce sued California to enjoin, or stop, AB‐51 from being enforced.
Today, December 30, 2019, California employers received a last‐minute reprieve from complying with the newly enacted AB‐51 that aimed to prevent them from utilizing mandatory arbitration agreements with their employees. The Court granted a Temporary Restraining Order, or TRO, against AB‐51, prohibiting the State from enforcing it. That TRO is effective until January 10, 2020. I've attached a copy of the TRO.
So, for now (at least until January 10, 2020), the status quo remains in effect, meaning your Dispute Resolution Plans or Arbitration Agreements are still effective and may be used to sign up new or existing employees to compel arbitration to resolve disputes as a condition of employment. *
If you haven't gotten a good Dispute Resolution Plan, now is the time to get one so that your existing workforce is base‐lined in to avoid costly and burdensome litigation. These agreements will be grandfathered in, so those businesses with existing Dispute Resolution Plans or Arbitration Agreements will allowed.
On January 10, 2020, the court could either (1) grant the preliminary injunction, preventing AB 51 from being enforced until trial; or (2) deny the preliminary injunction and thereby allow AB 51 to be immediately enforced. While the future of AB‐51 remains uncertain, today's news is an important first step.
I will try to keep you updated to any changes, and look for my update on January 10, 2020 on the Court's anticipated ruling for the Preliminary Injunction.
Thank you, and Happy New Year from us at Dieringer Law Group!
*Please consult with your legal counsel. This statement is for general educational and informative purposes only, and should not be considered legal advice or apply to your particular circumstance. You should consult with legal counsel for properly worded legal documents and for legal advice before taking any course of action.