By Brett M. Johnson, Esq.
Recently, an important change happened in California employment law. It resulted from a decision by the Ninth Circuit Court of Appeals regarding the practice of requiring employees to arbitrate disputes with their employers. The decision in U.S. Chamber of Commerce vs. Bonta reversed course for California employers and made clear that employers may require employees to arbitrate disputes. This ruling followed Assembly Bill 51, which was passed in 2019 and, until the Bonta decision, prohibited California employers from requiring employees to sign arbitration agreements. Bonta is a rare shift in the law that is favorable to California employers.
In Bonta, the Ninth Circuit ruled that the Federal Arbitration Act (FAA) – which encourages arbitration – preempts AB 51. This means, in essence, that the federal policy in favor of arbitration trumped AB 51, due to the supremacy of federal law over a conflicting state law. The Bonta ruling now allows mandatory arbitration agreements as an avenue that California employers can pursue with their employees and any potential job applicants. Businesses in the construction industry should take steps to benefit from the ruling.
What does this mean for you and your employees? For most employment law claims, you can now require that your non-bargaining employees and potential job applicants agree to arbitrate disputes as a condition of new employment or of continued employment. This is beneficial for a number of reasons. Arbitration is generally a quicker and cheaper alternative to proceeding in court. Lawsuits that proceed in court can drag out for years; arbitration can be completed much more quickly, with a corresponding effect on legal fees. Furthermore, arbitration provides a convenient alternative to proceeding in court, because, in arbitration, the parties have more flexibility with scheduling and related logistical details. Additionally, parties to arbitration have the ability to agree upon and choose their arbitrator, which is not the case in trial court litigation, where a judge is assigned to the case without the parties’ input. But perhaps the most beneficial characteristic of arbitration is that it is a private, rather than a public proceeding, and there is no jury. This makes a potential claim against the employer less attractive to the plaintiff’s attorneys who might otherwise take a case against a business and file it in court. Because juries are thought to be more favorable to employees than to employers, and because the potential for a jury to make an award based on sympathy or emotion is greater than for an arbitrator to do so, it is generally thought that the arbitration forum is favorable to the employer.
The Bonta decision was a win for California employers. In light of this recent development in the law, California employers are wise to revisit whether and how arbitration agreements can be best utilized with their non-bargaining workforce.
If you have questions about Bonta or about how to implement new arbitration agreements, contact knowledgeable employment law counsel to discuss how to strategically implement arbitration agreements with your employees.
Brett M. Johnson, Esq. is an associate with the law firm of Dunn DeSantis Walt & Kendrick. Brett’s practice is focused on the representation of businesses that are involved in disputes and in counseling business owners about employment law matters. He can be reached at bjohnson@ddwklaw.com.
Dunn DeSantis Walt & Kendrick provides a broad spectrum of legal services to businesses of all sizes, from small, local start-ups and non-profits to large, national companies. DDWK’s real estate development and construction practice includes representing all segments of the development and construction industries on both private and public projects.
You can find additional information and resources related to helping business owners and their businesses on the DDWK website.
