California Takes a Step in the Right Direction – Banning Mandatory Arbitration Agreements for New Employees

The push against mandatory arbitration clauses in consumer and employment agreements has just taken a significant step forward after California recently passed a law banning the clauses in certain employment contracts. But while the legislation is a step in the right direction, it still leaves plenty of ground to cover before all workers are covered. 

The San Francisco Chronicle reports that, earlier this month, California Governor Gavin Newsom signed a bill into law which will prevent companies from requiring new and existing employees to sign mandatory arbitration agreements as a condition for employment. The impetus for the legislation, which was introduced by San Diego Democrat assemblywoman Lorena Gonzalez, was a 2018 protest which saw thousands of Google employees walk out to protest many of the company’s practices that the workers felt were unfair, including mandatory arbitration policies.

According to the report, Assemblywoman Gonzalez estimates that the new law will affect more than two thirds of California workplaces. But, the legislation is not expected to  help those who are already locked into mandatory arbitration agreements. Those workers would need a change at the federal level.

Former WeWork employee Tara Zoumer was fired from that company in 2015 after she refused to sign a mandatory arbitration agreement. Zoumer was called to testify before the California legislature about her experience. Zoumer told the San Francisco Chronicle “Right now you have 60 million Americans who have been forced into those agreements, and many didn’t understand what they were entering into.”

Those opposed to mandatory arbitration clauses cite the fact that oftentimes companies which frequently engage in arbitration become so called “super repeat players.” These companies have a 97 percent win rate at arbitration, stacking the odds against employees and consumers. Additionally, as arbitration settlements are usually kept private, the public has little opportunity to become informed about injustices perpetrated by corporations.