California law ending forced arbitration put on hold

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Posted by Legal Team On January 3, 2020

As of Jan. 1, 2020, California was set to ban forced arbitration in employment contracts — a move that was designed to keep sexual harassment victims from being forced to settle and stay silent after being abused. Critics have long said that forced arbitration clauses can end up punishing the victims for fighting back. They also tend to protect the sexual harasser since a company can often settle a claim quickly and quietly — without any risk to its reputation.

A federal judge has blocked the new law, however, at the last minute. The current injunction is temporary, pending a deeper review of the arguments brought by the California Chamber of Commerce and other opposition groups. The groups, comprised largely of business entities, say that arbitration clauses are protected under federal law and that they encourage a fair settlement. They allow companies to more quickly resolve sexual harassment cases without the unnecessary expense of court.

Critics of forced arbitration — which makes agreeing to arbitration a condition of employment — say that the victimized are often placed at a distinct disadvantage. The arbitration clauses often put the employer in charge of picking — and paying for — the arbitrator. They say this encourages arbitrators to be “pro-company,” instead of truly neutral. They also point out that the new California law doesn’t expressly forbid all arbitration agreements — it just makes it illegal for an employer to insist on one and to punish an employee who refuses to agree.

Although a hearing is set for Jan. 10, the odds are high that this issue will end up being fiercely debated — and fought over — in court. In the meantime, victims of sexual harassment at work are urged to get experienced legal assistance in order to best protect their rights.