Metropolitan News-Enterprise


Tuesday, October 14, 2003


Page 3


Davis Vetoes Bill Limiting Employment Arbitration Agreements


By a MetNews Staff Writer


A bill that would have prohibited employers from requiring workers to agree to arbitrate discrimination claims as a condition of employment was vetoed Sunday by Gov. Gray Davis.

“This bill would apply to small businesses, the entities most likely to benefit from [alternative dispute resolution],” the governor wrote in explaining his veto of AB 1715, sponsored by the Assembly Judiciary Committee. “In my State of the State address I pledged to help California’s small businesses to compete and thrive in California. I am concerned about adversely affecting the ability of California business to cost efficiently resolve disputes.”

AB 1715, which passed on party-line votes of 23-15 in the Senate and 44-33 in the Assembly, would have invalidated all existing agreements in which employees and employers have agreed to arbitration claims under the state’s Fair Employment and Housing Act. Some provisions of FEHA apply to all employers, while the remainder apply to those with five or more workers.

The vetoed legislation would have allowed employers and employees to enter into new arbitration agreements, but only if the employee’s consent to arbitration was “knowing, voluntary, and not made a condition of employment or continued employment.”

Davis noted that he had signed legislation two years ago establishing ethical standards for arbitrators, addressing concerns about the fairness of the process to employees and consumers, and suggested “[t]here may be other reforms to the arbitration process that the Legislature can adopt which will be fair to employees and employers alike.”

The governor, who leaves office next month as a result of last week’s historic recall election, added a postscript:

“I am proud of my civil rights record and proud of the many significant civil rights measures this Legislature has authored, passed and presented to me for signature. I want to thank the sponsors, the supporters and all of the members of the Legislature for their dedication to insuring California has the strongest civil rights laws in the nation.”

The authority of employers to bind their employees to arbitration of discrimination disputes has been hotly contested in California and around the country. The Ninth U.S. Circuit Court of Appeals, in an 8-3 en banc ruling Oct. 1, overruled Duffield v. Robertson Stephens & Co., 144 F.3d 1182 (9th Cir. 1998), in which a three-judge panel held that compelling an employee to arbitrate a claim brought under Title VII of the Civil Rights Act of 1964 was illegal.

Other federal appeals courts have upheld binding arbitration of claims under Title VII, which bars discrimination based on race, religion, national origin, or gender. The U.S. Supreme Court had previously upheld binding arbitration of age discrimination claims.

The governor over the weekend also vetoed two employment-related bills by Assemblyman Paul Koretz, D-West Hollywood.

AB 1133 would have imposed a 100 percent penalty on the portion of a judgment for unpaid wages that remained unpaid six months after the judgment became final, plus an additional 100 percent penalty every six months, up to a maximum of four such penalties.

AB 274 would have created a rebuttable presumption that an adverse job action occurring within 60 days of an employee’s complaint of an unlawful employment practice is retaliatory.

Davis said that while prompt payment of wages should be encouraged, AB 1133’s proposed penalties were too harsh.

The governor said he vetoed AB 274, which is similar to a bill he vetoed last year, because it “could allow any employee who suspects the possibility of an adverse action to stall that action by fabricating a complaint,” “could make it difficult for a supervisor to legitimately discipline a problem employee who has exercised any right given under the Labor Code,” “would create a burden on employers who would constantly have to defend any disciplinary action taken,” and “has the potential to pre-empt a collective bargaining agreement’s grievance procedures, and could interfere with the ability for the parties to negotiate a settlement.”


Copyright 2003, Metropolitan News Company