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In the United States, it is common for employers to require applicants and existing employees to sign arbitration agreements as a condition of employment or continued employment. As of October 10, 2019, California Governor Gavin Newsom signed into law California Assembly Bill 51 making it unlawful for California employers to require applicants and employees to sign arbitration agreements as a condition of employment. The Bill has been codified in Labor Code section 432.6 and has been in effect since January 2020. On September 15, 2021, in a 2-1 decision, the Ninth Circuit, inChamber of Com. of United States v. Bonta, 13 F.4th 766 (9th Cir. 2021), upheld California’s law banning mandatory arbitration agreements and prohibiting employers from retaliating against applicants who refuse to sign an arbitration agreement.
If you are refused employment or terminated by an employer for not signing an arbitration agreement, there are several remedies available to you under the Labor Code and the Fair Employment and Housing Act (FEHA). Specifically, by violating Labor Code section 432.6, a business exposes itself under sections 23 and 433 to criminal penalties, including “imprisonment in a county jail, not exceeding six months, or … a fine not exceeding one thousand dollars ($1,000), or both,” as well as injunctive relief and attorney’s fees to a prevailing plaintiff for enforcing his/her rights. Additionally, violation of section 432.6 constitutes “an unlawful employment practice,” which subjects employers who violate this section to civil sanctions, including state investigation and private litigation under the FEHA. So remember, if an employer asks you to sign an arbitration agreement, you have a right to refuse.
If your employer is insisting that you sign an arbitration agreement to obtain or continue your employment, or if your employer retaliated against you for refusing to sign an arbitration agreement, please call us at (415) 453-4740 to learn more about your rights.