AB 465 – California’s Attempt to Kill Arbitration Agreements

The California Senate is currently considering AB 465, a bill that would essentially eliminate arbitration agreements in employment and other settings.  A person, i.e., employer, who seeks to enforce an arbitration agreement, would be required to prove to the court that the employee’s consent was “knowing and voluntary and not made as a condition of employment.” 

It is not at all clear what amount of evidence would meet the burden of proof.  Nor is the procedure clear for making the claim.  For example, can the employer present evidence of a voluntary waiver when filing a Petition to Compel Arbitration at the outset of the filing of a complaint?  Or must the employer plod through some of the litigation process, including discovery, before petitioning for arbitration? 

And what effect does this legislation have after the 2011 United States Supreme Court ruling in AT&T Mobility LLC v. Conception?   That case held that arbitration agreements are binding, and that the Federal Arbitration Act preempts any state law governing the enforceability of arbitration agreements. 

It would seem that an employer could simply cite to the Conception case and avoid the limitations of AB 465.  However, that strategy comes at a potential price.  AB 465 imposes a penalty of $10,000 per individual for each violation of the proposed law, plus attorneys’ fees.  (Obviously, the California trial attorneys love this provision!) 

Interested in reading AB 465?  Paste this into your browser:  http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=2015...