Employers’ Right to Require Arbitration Restricted in 2015

Effective January 1, 2015, employers will face tighter restrictions on their ability to impose arbitration of employment claims.

Assembly Bill 2617, recently signed by Governor Brown, reverses prevailing legal trends that have expanded the use of arbitration clauses in many types of contracts. Presently, many companies require new employees to sign agreements waiving their rights to file claims in court or with government agencies. Applicants who decline to sign these agreements are frequently denied employment.

The new law prohibits employers from requiring employment candidates to sign such broad arbitration agreements and further prohibits businesses from refusing employment to individuals who refuse to waive their legal rights to file a lawsuit or governmental complaint.

The bill is “prospective” only, meaning it applies to contracts entered into, modified or extended after January 1, 2015.

If you are uncertain whether your current employment contracts comply with the new law, contact our office for a review.