Employment Arbitration Agreements and the One Year Statute of Limitations for Harassment/Discrimination Claims Survive in California

Employment lawsuits can be very costly to employers. Recent proposed state legislation, if passed, could have dramatically increased the number of lawsuits against employers. Governor Brown, however, just vetoed two key measures.

On September 30, 2018, Governor Jerry Brown vetoed Assembly Bill 3080 (AB 3080), which CalChamber described as a “Job Killer” bill.  Had Governor Brown signed AB 3080 into law, employers would have been prohibited from requiring employees to sign arbitration agreements as a condition of employment or continued employment.  In his message regarding AB 3080, Governor Brown stated the United States Supreme Court has made it clear the Federal Arbitration Act governs not only the enforcement but also the initial formation of arbitration agreements, and it is “impermissible” for California to “prevent mandatory arbitration agreements from being formed at the outset.”  Governor Brown concluded that AB 3080 “plainly violates federal law.”

Governor Brown also vetoed Assembly Bill 1870 (AB 1870).  This bill would have extended the deadline to file a complaint of harassment or discrimination with the Department of Fair Employment and Housing from one year to three years.  Governor Brown explained that although victims of workplace harassment and discrimination should have every opportunity to have their complaints investigated, he believes the one year filing deadline which has been in place since 1963 “not only encourages prompt resolution while memories and evidence are fresh, but also ensures that unwelcome behavior is promptly reported and halted.”

Governor Brown’s decision to veto AB 3080 once again reaffirms a strong policy in favor of arbitration.  The decision to veto these measures may result in keeping the status quo with respect to litigation costs for employers.  However, we expect legal challenges to employment laws and arbitration agreements will continue. Therefore, it is important for employers to stay abreast as employment laws constantly change.  For employers that use arbitration agreements, they should continually assess whether any revisions are necessary or beneficial in light of the arbitration active area of law.