Proposed California Bill Prohibits Forced Waiver of Rights As Condition of Employment

The California State Senate recently passed a bill which would make it unlawful to require any prospective employee from waiving any legal rights as a condition of employment.  This includes the “right to file and pursue a civil action or complaint.”  The text of the proposed bill reads: 

“A person shall not require another person to waive any legal right, penalty, remedy, forum, or procedure for a violation of any provision of this code, as a condition of employment, including the right to file and pursue a civil action or complaint with, or otherwise notify, the Labor Commissioner, state agency, other public prosecutor, law enforcement agency, or any court or other governmental entity.”

You can read the rest of the proposed bill, including exceptions, here.  While some may think it runs afoul of AT&T Mobility LLC v. Conception, I think that’s a knee jerk reaction (although understandable).  This bill deals with employment agreements, not arbitration agreements.  The bill doesn’t state that employees cannot waive their rights or that an arbitration agreement is per se unconscionable or invalid; it means only that an employee cannot be forced to waive rights as a condition of employment.  In other words, the focus of the legislation is on situations where an employee is forced to give up legal rights as a condition of employment, not on singling out arbitration.  Furthermore, there is a big exception for those employees who are “individually represented by legal counsel” in negotiating their employment contracts.  In other words, this provision permits the enforcement of agreements to arbitrate where the agreement was entered into knowingly and voluntarily (for example, by a higher level employee) and recognizes that for many people, employment contracts are contracts of adhesion.

I think this accords with the rationale rendering other types of provisions invalid as against public policy, such as exculpatory clauses in residential leases or agreements that require one party to indemnify the other for the other party’s gross negligence or willful misconduct.  The bill recognizes the bargaining imbalance and the inherent coerciveness of employment agreements – most people need a job to survive (and, conversely, recognizes that some hotshots may be in a different position and actually do bargain with prospective employers).  Given the state’s interest in protecting its workers  –and California has demonstrated time and again that it is looking out for its workers by, for example, prohibiting non-compete clauses — I think the proposed law is sound.  It heads back to the Assembly where it started (and is likely to be approved).  Stay tuned.