Senate approves Wieckowski, Hertzberg bill to protect workers, consumers when companies withhold payment in arbitration

May 28, 2019

SACRAMENTO – In a victory for California workers and consumers, the state Senate today approved Senate Bill 707 by Senator Bob Wieckowski (D-Fremont) and Senate Majority Leader Robert Hertzberg (D-Van Nuys) to deter companies that make their employees or customers follow mandatory arbitration agreements from stalling or obstructing the arbitration process by withholding payment of arbitrator fees.

“Businesses and employers should not be allowed to force Californians into arbitration and then flout the system by stalling or stopping payment to the arbitrator when a case is not going their way,” said Wieckowski, a member of the Senate Judiciary Committee.  “They created the arbitration agreement and they must abide by it. Workers and consumers are already being denied their day in court through forced arbitration.  SB 707 gives them options and remedies should companies refuse to pay on time.”

The bill would declare that a company that fails to make timely payments is in material breach of the arbitration contract.  Workers or consumers could withdraw from the arbitration and pursue court action or compel arbitration under the contract.

“SB 707 gives California workers and consumers important protection from companies that are abusing the arbitration process by withholding payment,” said Rene Bayardo, senior government relations advocate for SEIU California.  “When workers are prohibited from resolving their disputes in court, and companies willfully obstruct arbitration proceedings, there is no avenue for justice.  That is why we support SB 707.  It allows courts to step in and appropriately sanction the defaulting businesses.  With forced arbitration agreements so prevalent in today’s workplace, we need to rein in the actions of companies abusing the system and denying workers their rights.”     

Nonpayment is occurring at all stages of arbitration, from the initial filing fee, to the very end of the proceeding.  Nonpayment toward the end of the arbitration is often to prevent the release of a judgment or award that is favorable to the worker or consumer.

SB 707 is supported by the California Labor Federation, California Employment Lawyers Association, Consumer Attorneys of California, United Food and Commercial Workers, Conference of California Bar Associations, Equal Rights Advocates and SEIU California.

Senator Wieckowski represents the 10th District, which includes southern Alameda County and parts of Santa Clara County.