Assembly passes major arbitration bill to protect workers, consumers when companies won't pay arbitration fees

Wieckowski, Hertzberg's SB 707 would stop companies from gaming the rules in arbitration

September 11, 2019

SACRAMENTO – The state Assembly today passed a major arbitration reform bill to give workers and consumers several remedies when companies that have forced them into mandatory arbitration agreements obstruct those deliberations by refusing to pay the required arbitration fees.  SB 707, jointly authored by Senators Bob Wieckowski (D-Fremont) and Senate Majority Leader Bob Hertzberg (D-Van Nuys), now heads to the Senate for a concurrence vote.

“These abusive companies have forced employees and consumers to sign mandatory arbitration agreements as a condition of employment or use of their services,” said Wieckowski, a member of the Senate Judiciary Committee. “Now, they want to shirk their responsibilities by not paying the fees when their workers and customers exercise their limited rights under the agreement created by the companies.  If employees are prevented from going to the courts and the companies also effectively block them from arbitration, how are they to seek justice? SB 707 allows workers to pursue their claims and deter companies from breaching their own arbitration clauses.”

Mandatory arbitration provisions are ubiquitous in America.  They prevent workers and consumers whose rights have been violated from pursuing their claims in court.  Instead, they must go through an arbitration process that overwhelmingly favors businesses.  By withholding payment of arbitration fees, the businesses obstruct the process with the hope the claims will be abandoned.

“SB 707 will allow consumers and employees to fully vindicate their rights should companies try to obstruct the arbitration process by refusing to pay their share of the arbitration fees,” said Mariko Yoshihara, policy director of the California Employment Lawyers Association (CELA).  “This bill provides much-needed clarity in the event that a company’s non-payment of fees puts the proceeding in limbo.”

“It’s bad enough that companies get away with forcing arbitration on consumers and workers, but to have them stall the arbitration process adds insult to injustice,” said Consumer Attorneys of California President Mike Arias. “This legislation will ensure that these cases don’t become orphans mired in a system being gamed by big corporations.” 

The bill affirmatively gives consumers and employees a choice whether to instead proceed in court, continue the arbitration, or compel the business to pay up.

“The growing use of forced arbitration undermines years of laws put into place to protect workers,” said California Labor Federation Executive Secretary-Treasurer Art Pulaski. “SB 707 is an important measure to shield working people from the scourge of forced arbitration and the injustice it creates. We thank Senator Wieckowski for standing up for the rights of workers with this bill.”

SB 707 also requires demographic information from arbitration firms.  It seeks to obtain better data on the ethnicity, race, gender, gender identity, disability, sexual orientation, and veteran status of the arbitrators. A 2015 survey of practicing employment arbitrators, found 74 percent of those surveyed were male and 92 percent were Caucasian.

As more and more rights are adjudicated in arbitration, it is critical that the pool of private arbitrators begins to reflect the diverse backgrounds of the people who are bringing their claims.

In addition to the Consumers Attorneys of California, the California Labor Federation, and CELA, SB 707 is also supported by the Service Employees International Union - California, UNITE HERE, United Food and Commercial Workers Western States Council, International Brotherhood of Teamsters, Utility Workers Union of America, International Association of Machinists and Aerospace Workers International, among many others.

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