Nothing is necessarily wrong about binding arbitration agreements, at least if both parties are on an equal footing. Of course, in the real world, not all parties to a dispute have the same level of power or resources. California lawmakers say forced arbitration agreements penalize workers for the benefit of employers. AB 51 was designed to address this issue. On July 27, 2003, the legislature sent 1715 to Governor Davis for signature. The bill seeks to invalidate FEHA`s rights reconciliation agreements where such agreements are necessary as a condition for employment or employment. The bill also strikes an employer who wants to force arbitration to prove that the employee knowingly and voluntarily signed the agreement. No, as long as the law is not anticipated by the FAA. Pending the adoption of AB 51, an employer could require a mandatory reconciliation of legal rights prior to litigation for all persons who have accepted employment.
Under AB 51, an employer cannot make arbitration as a condition of employment. Any employer who does so may face rights of retaliation or discrimination under the law. One of the most important aspects of the flexibility of arbitration is the selection of the referee. Unlike a civil court proceeding in which the parties are in conflict with the judge to whom they are assigned, the arbitration procedure allows the parties to choose an experienced arbitrator in the field of litigation. However, one drawback is that employers often try to choose arbitrators they find favourable to their case. The first question to be answered is whether the determination of arbitration includes insurmountable public rights (usually statutory rights, such as minimum wage, overtime and discrimination rights) or wailable private rights (such as confidentiality agreements and ownership of labour products created during employment). Both types of claims require that an arbitration decision not be unacceptable (see below). In addition, the arbitration decision must include four additional elements for non-negotiable public rights claims to be considered enforceable.
The FAA generally makes arbitration agreements « valid, irrevocable and enforceable » and has been expressly designed to reflect a national policy in favour of arbitration. Under the FAA, a state cannot enact or enforce laws that disrupt, restrict, treat unequally or discriminate remedies. It was difficult for me to read Mayer Brown`s paeans before an arbitration tribunal without thinking of the thousands of workers who tried to impose arbitration applications, as their employment contracts demand, simply to see how their employers refuse to pay the fees necessary to launch their cases. Of course, only a handful of companies have been targeted so far in mass arbitration proceedings and it is not fair to think that all companies would react by raising doubts about workers` rights to conciliation. A new California law penalizes companies that refuse to pay arbitration fees, including repealing mandatory arbitration rules and removing companies from the right to impose arbitration.