There have been substantial recent developments in arbitration clauses for San Diego employers. The legal waves began when the Supreme Court of the United States (SCOTUS) recently published a decision which profoundly affected arbitration clauses for San Diego and Southern California employers and their employment contracts. The case, Epic Systems v. Lewis, known commonly as “Epic” concerns the Federal Arbitration Act (FAA) and the enforceability of arbitration agreements. The impact of Epic is especially important when viewed in the context of the most recent “Chamber of Commerce v. Bonta” Decision.
The California Attempt to Eliminate Employer Arbitration
The California attempt to eliminate employer arbitration options has been engaged for years. The legislature passed AB 51 in 2019 which effectively prevents an employer from requiring an arbitration agreement as a condition of employment. AB 51 attempted to circumvent the SCOTUS decisions in the Epic case and basically make it a criminal offense for an employer to require an employee to enter into an arbitration agreement.
This resulted in legal battles at many levels of state and federal courts in which an employer’s rights to require arbitration were stayed, upheld, and then stayed again.
Recent Developments in Arbitration Clauses for San Diego Employers: Chamber of Commerce v. Bonta
The recent developments in arbitration clauses for San Diego employers is good news. Chamber of Commerce v. Bonta provides additional protections and certainty regarding the implementation of arbitration clauses for San Diego and Southern California employers which require bilateral arbitration. In most cases, Chamber of Commerce v. Bonta ensures decisions reached in bilateral arbitration will be recognized, upheld and enforced by California courts.
Commerce v. Bonta essentially found that the Federal Arbitration Act preempts California AB 51 and re-established the entirety of that important body of law. The Court found AB 51 “disfavors the information of arbitration agreements and stands as an obstacle” to the purpose of the Federal Arbitration Act. Most importantly, the Court found that all of the components of AB 51 “work together” and therefore parts of AB 51 could not stand alone. In other words, AB 51 cannot be enforced. San Diego and Southern California employers may once again consider arbitration agreements as a part of their employment agreement.
Substantial Challenges Remain for San Diego and Southern California Employers
San Diego employers are under substantial pressure from many fronts regarding employees including PAGA actions, wage and hour issues, unpaid overtime and the risk of misclassification of independent contractors arising out of the Dynamex ruling. The Chamber of Commerce v. Bonta decision increases the power of properly formatted arbitration clauses which help to reduce risks associated with employee-related litigation and disputes.
The Watkins Firm will review your existing employment contracts and other business contracts with regards to arbitration clauses. We work to ensure all of your agreements deploy the proper language and protections available under law to reduce the risk of potential litigation and minimize resulting financial exposure.
The Chamber of Commerce v. Bonta decision provides important protections for arbitration clauses for San Diego and Southern California employers and is good news for San Diego employers. What is the best way to ensure your contracts and employment agreements contain enforceable arbitration clauses? How can you reduce risks associated with employee related litigation?
We invite you to review our recent podcast Episode 29 Recent Developments in Arbitration Clauses, the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today. Learn how our experienced San Diego employer defense attorneys and business contract lawyers can help to increase protections surrounding every aspect of your business.
