Are mandatory arbitration agreements a thing of the past?

One of the best risk control techniques invented in the last 100 years is the arbitration agreement.  Its use has skyrocketed in the last 20 years and for good reason.  The reduction of legal fees and super-wild judgments is just the start.  Fear and lack of hope for a big payout are other factors employers hope employees experience if and when they think about suing their employers.

The the plethora of sexual harassment cases in the media have cast sunlight on the techniques used to keep compliants and legal cases under the radar.  And the #metoo movement has inspired Gov. Brown to seriously consider prohibiting arbritration agreements in California workplaces.  As of August 23, 2018 the AB 3080 bill was enrolled meaning that it is now sitting at the Govoner’s desk to be Chaptered.  And that spells a new way of doing business in California.

Sexual harassment suits are about to get more expensive and serious

With the loss of arbitration agreements in the workplace, sexual harassment claims will become the largest legal threat employers will face in the next 10 years.  Especially, if risk management continues to handle the complaints in the same similiar manner as they have been doing.  In a recent episode of the Risk Control Show we spoke about how AMC handled the Chris Hardwick scenario (a good way to handle it).

Unfortunately, way too many risk managers and supervisors don’t know how to properly handle sexual harassment complaints and when to hand them off to law enforcement if they rise to the level of a crime.  So, with the potential to face the music in every case without the safety net of an arbitration agreement, risk managers and supervisor must learn the proper way to handle these complaints.

What to do next

Here’s a few next steps that risk managers should take in preparation for the passage of AB 3080:

  • Review your budget
  • Assemble your legal team
  • Review your sexual harassment policies
  • Hold policy training for your supervisors
  • Bring in 3rd party trainers to teach sexual harassment, diversity and sensitivity
  • Hold training for all your staff and get tough on enforcement of the policy



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