Time to Stop Abuses, Increase Diversity in Arbitration System

American workers are putting in more hours at their jobs than they did decades ago. Yet with a shrinking middle class and widening income gap between the rich and poor, many may be wondering why they are working more and sharing less in the prosperity of our economy.

One reason is the rights of workers are diminishing. Many are laboring in a work environment where they must literally sign away some of their rights as a condition of employment.

My Senate Bill 707, jointly authored with Senate Majority Floor Leader Bob Hertzberg, will help stop a growing practice where employers require their employees to sign an arbitration agreement that denies them their day in court, then obstruct the arbitration process when it benefits the companies’ bottom line.   It would also bring much-needed transparency to the lack of diversity among arbitrators by requiring demographic information from arbitration firms, just like we do with California’s judges.

SB 707 would provide workers and consumers with options for dealing with a breach of contract to deter companies from purposely withholding the payment of arbitration fees.

Forced arbitration policies are common in American workplaces. They require employees to arbitrate disputes rather than seek a remedy in court. Studies show arbitration proceedings overwhelmingly favor employers over employees.  Making matters worse, recent court decisions have eliminated class action by workers in arbitration.

But workers are fighting back.  Unable to file a class action, and not wanting to acquiesce to workplace abuses, employees have filed thousands of individual arbitration cases.  The response by some companies is to game the system by withholding payment to the arbitrator in order to prevent the arbitrations from even beginning, denying any recourse for aggrieved workers.

SB 707 would prevent such action by declaring that failure to make timely payments is a material breach of the arbitration contract. Workers or consumers could withdraw from the arbitration and pursue court action or compel arbitration under the contract. Under SB 707, they could continue in arbitration and recover the employer’s share of the fees at the end of the proceeding whether they win or lose the case.

The companies create the arbitration agreements and they should abide by them or suffer the consequences for breaching the contracts.

By requiring demographic information from arbitration firms, SB 707 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.

When the arbitrators do not reflect the diverse experiences and backgrounds of the people who are bringing the claims, it highlights how unfair the arbitration process is to workers and consumers.

The demographic data required by SB 707 should initiate more diverse recruitment and hiring practices by arbitration firms. This combined with expanded protections for people filing arbitration claims is why several organizations such as the California Employment Lawyers Association and the Consumer Attorneys of California, are joining the California Labor Federation, SEIU, UFCW, Unite Here, International Brotherhood of Teamsters, the Association of Machinists and Aerospace Workers International, among others.

Giving workers and consumers a better chance to enforce their rights through SB 707, is a step toward a more just and fair economy.


State Senator Bob Wieckowski serves on the Senate Judiciary Committee and represents the 10th District.