Legislature Sends Anti-Arbitration Job Killer Bill to Governor

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A California Chamber of Commerce-opposed job killer bill that if enacted could significantly drive up litigation costs for all California employers passed both houses of the Legislature this week and is headed for the Governor’s desk.

The CalChamber is urging its members to contact the Governor and ask that he veto AB 465 (R. Hernández; D-West Covina), which will increase pressure on the already-overburdened judicial system.

AB 465 precludes mandatory employment arbitration agreements, which is likely pre-empted by the Federal Arbitration Act. The bill will serve only to increase litigation costs of individual claims, representative actions and class action lawsuits against California employers of all sizes until such legislation can work through the judicial process to be challenged once again.

Increased Litigation

The CalChamber opposes AB 465 and identified it as a job killer because:

• Existing contract law already requires all employment arbitration agreements to be freely and mutually executed.

• Existing law already mandates all employment arbitration agreements to be conscionable.

• Arbitration does not favor employers under the “repeat player” theory.

• Studies prove employment arbitration is more efficient and provides higher success rates for employees.

• AB 465 is broader than AB 2617 (Weber; D-San Diego), which was signed by the Governor last year, and includes all employment claims.

• AB 465 will force low-wage employees to overburdened courts.

• AB 465 is pre-empted by federal and state laws.

• AB 465 will create a worse litigation environment and lack of job creation.

Key Votes

AB 465 passed the Senate, 22-15, on August 24.

Ayes: Allen (D-Santa Monica), Beall (D-San Jose), Block (D-San Diego), de León; D-Los Angeles), Hall (D-Los Angeles), Hancock (D-Berkeley), E. Hernandez (D-West Covina), Hertzberg (D-Van Nuys), Hill (D-San Mateo), Hueso (D-San Diego), Jackson (D-Santa Barbara), Lara (D-Bell Gardens), Leno (D-San Francisco), Leyva (D-Chino), Liu (D-La Cañada Flintridge), McGuire (D-Healdsburg), Mendoza (D-Artesia), Mitchell (D-Los Angeles), Monning (D-Carmel), Pan (D-Sacramento), Pavley (D-Agoura Hills), Wieckowski (D-Fremont).

Noes: Anderson (R-Alpine), Bates (R-Laguna Niguel), Berryhill (R-Twain Harte), Cannella (R-Ceres), Fuller (R-Bakersfield), T. Gaines (R-El Dorado Hills), Glazer (D-Contra Costa), Huff (R-Diamond Bar), Moorlach (R-Costa Mesa), Morrell (R-Rancho Cucamonga), Nguyen (R-Garden Grove), Nielsen (R-Gerber), Runner (R-Lancaster), J. Stone (R-Temecula), Vidak (R-Hanford).

No Vote Recorded: Galgiani (D-Stockton), Roth (D-Riverside), Wolk (D-Davis).

The Assembly concurred in Senate amendments to AB 465 on August 27, 44-29, sending the bill to the Governor:

Ayes: Alejo (D-Salinas), Atkins (D-San Diego), Bloom (D-Santa Monica), Bonilla (D-Concord), Bonta (D-Oakland), Burke (D-Inglewood), Calderon (D-Whittier), Campos (D-San Jose), Chau (D-Monterey Park), Chiu (D-San Francisco), Chu (D-San Jose), Cooper (D-Elk Grove), Dababneh (D-Encino), Daly (D-Anaheim), Dodd (D-Napa), Eggman (D-Stockton), C. Garcia (D-Bell Gardens), E. Garcia (D-Coachella), Gatto (D-Glendale), Gipson (D-Carson), Gomez (D-Los Angeles), Gonzalez (D-San Diego), Gordon (D-Menlo Park), R. Hernández (D-West Covina), Holden (D-Pasadena), Jones-Sawyer (D-South Los Angeles), Levine (D-San Rafael), Lopez (D-San Fernando), Low (D-Campbell), McCarty (D-Sacramento), Medina (D-Riverside), Mullin (D-South San Francisco), Nazarian (D-Sherman Oaks), O’Donnell (D-Long Beach), Perea (D-Fresno), Quirk (D-Hayward), Rendon (D-Lakewood), Ridley-Thomas (D-Los Angeles), Santiago (D-Los Angeles), M. Stone (D-Scotts Valley), Thurmond (D-Richmond), Ting (D-San Francisco), Weber (D-San Diego), Williams (D-Carpinteria).

Noes: Achadjian (R-San Luis Obispo), Allen (R-Huntington Beach), Baker (R-San Ramon), Bigelow (R-O’Neals), Brough (R-Dana Point), Chang (R-Diamond Bar), Chávez (R-Oceanside), Dahle (R-Bieber), B. Gaines (R-El Dorado Hills), Gallagher (R-Yuba City), Grove (R-Bakersfield), Hadley (R-Torrance), Harper (R-Huntington Beach), Irwin (D-Thousand Oaks), Jones (R-Santee), Kim (R-Fullerton), Lackey (R-Palmdale), Linder (R-Corona), Maienschein (R-San Diego), Mathis (R-Visalia), Mayes (R-Yucca Valley), Melendez (R-Lake Elsinore), Obernolte (R-Big Bear Valley), Olsen (R-Modesto), Patterson (R-Fresno), Steinorth (R-Rancho Cucamonga), Wagner (R-Irvine), Waldron (R-Escondido), Wilk (R-Santa Clarita).

No Vote Recorded: Brown (D-San Bernardino), Cooley (D-Rancho Cordova), Frazier (D-Oakley), Gray (D-Merced), Rodriguez (D-Pomona), Salas (D-Bakersfield), Wood (D-Healdsburg).

Staff Contact: Jennifer Barrera

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Jennifer Barrera
About Jennifer Barrera
Jennifer Barrera, senior policy advocate, works with the executive vice president in developing policy strategy and represents the CalChamber on labor and employment, taxation and legal reform issues. Before joining the CalChamber in September 2010, she worked at a statewide law firm that specializes in labor/employment defense. She also advised small and large businesses on compliance issues, presented seminars on employment-related topics, and authored articles in human resources publications. Barrera earned a B.A. in English from California State University, Bakersfield, and a J.D. with high honors from California Western School of Law.