Gov. Newsom signs arbitration bill giving California’s workers, consumers a big win

SACRAMENTO – Delivering a big victory for California workers and consumers, Governor Gavin Newsom on Sunday, October 13, signed SB 707, jointly authored by Senator Bob Wieckowski (D-Fremont) and Senate Majority Leader Bob Hertzberg (D-Van Nuys), to deter companies that have forced their customers and employees into arbitration from obstructing the process by refusing to pay the required arbitration fees.

“I applaud the Governor for signing this important bill that expands the rights of workers and consumers and cracks down on companies who shirk their responsibilities when people exercise their already-limited rights in arbitration,” said Wieckowski, a strong advocate for transparency and legislation to bring more balance into the arbitration process.  “The companies write the arbitration clauses.  Now, they are breaching their own written clauses to tip the scales of justice even more in their direction.  SB 707 will stop these abuses and I am pleased that Governor Newsom is standing up for workers and consumers.”

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

It also includes another important component that requires arbitration firms to provide demographic information.  A 2015 survey of practicing employment arbitrators, found 74 percent of those surveyed were male and 92 percent were Caucasian.  SB 707 seeks to obtain better data on the ethnicity, race, gender, gender identity, disability, sexual orientation, and veteran status of arbitrators.  With more cases being adjudicated in arbitration, it is critical that the pool of private arbitrators better reflects the diverse backgrounds of the people who are bringing the claims, Wieckowski said.

“SB 707 is a critical reform to California’s rigid arbitration process, which too often gives companies an advantage over individuals locked into binding arbitration agreements,” Hertzberg said.  “This marks an important step toward providing workers and consumers with meaningful remedies when companies try to game the system and coerce them into abandoning their claims.”

It is Wieckowski’s fourth arbitration bill signed into law during his tenure in the Legislature.

“We applaud the Governor for signing SB 707 into law.  This bill 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).  “SB 707 provides much-needed clarity in the event that a company’s non-payment of fees puts the proceeding in limbo.”

In addition to CELA, SB 707 is supported by the Consumers Attorneys of California, the California Labor Federation, 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. 

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