It was less than a year ago that the Supreme Court ruled that employees could be required to individually arbitrate claims (and waive their right to participate in a class action), but arbitration agreements aren’t a silver bullet. In fact, some employers are responding to local legislation and employee resistance by pulling back from arbitration requirements.
Just last week, Google responded to employee protests and announced that it would no longer require its workers to arbitrate employment related claims. Read more about Google’s decision here.
Whether or not employee arbitration agreements make sense is a very company-specific decision. Think carefully about what you’re trying to accomplish with these agreements and talk to your legal counsel about the risks and benefits.
California has passed a new law prohibiting employers from requiring workers to litigate claims under other states’ laws.
The law, which applies to agreements entered into, modified or extended beginning January 1, 2017, states that any agreement to pursue employment-related claims, including arbitration, outside of California or under the laws of another state violates public policy and is “voidable by the employee.” The new law codifies existing case law finding such choice of law provisions invalid.
This new law serves as a great reminder for California employers to review their employment agreements to make sure that they do not choose another state’s law. Likewise, multi-state employers with operations in California should make sure that the documents being signed by California employees either choose California law or are silent on what state’s law applies.