Federal Judge Ruling Puts California Arbitration Bill on Hold

Federal Judge Ruling Puts California Arbitration Bill on Hold
Jan 02, 2020

In a state bill recently signed into law, California employers cannot include forced arbitration in your employment agreement. If you file a complaint about a violation of employment laws, you don’t have to settle the matter behind closed doors.

However, while the law was supposed to take effect on January 1, 2020, a judge ruling has prevented that. As a lawsuit from multiple parties goes through the courts, the bill is currently on hold.

Critics of Forced Arbitration Say It Hides Discrimination

Arbitration is a closed-door process. Companies don’t have to release the details of complaints publicly. Many California companies included it as a condition of employment to save time and money fighting claims in court. But employee advocates say that forced arbitration lets companies hide allegations of harassment and discrimination.

After many times trying to ban the practice, lawmakers in California successfully passed a bill last year. By making the practice illegal, they hoped to ensure employees can bring complaints of harassment or discrimination through public courts.

Business Advocates Challenged the Law

However, the California Chamber of Commerce, among others, filed a lawsuit in December to challenge the bill. The lawsuit says that the bill will hurt companies more than it helps employees.

Right before the law went into effect, a federal judge agreed to hear the motion from the lawsuit. The judge granted a temporary restraining order against the bill. A hearing will determine if the groups challenging it can move forward with their claims. If the court decides that the bill goes against federal law, it may overturn it.

Arbitration Can Keep Complaints Sealed

Forced arbitration can have a significant impact on how you report claims of harassment or discrimination. You may want to make sure the public knows about any issues. But you can find yourself limited to a private meeting with only your employer and a third-party arbitrator. Instead of a trial that leaves a public record, your complaint may stay sealed.

The outcome of the lawsuit will determine whether California employers can continue to force arbitration for harassment and discrimination claims.

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