Legislative lowdown: California moves to limit arbitration, Minnesota drops degree requirements

In October, California passed a law that will complicate employers’ reliance on arbitration to settle employment disputes, while Minnesota’s governor signed an executive order dropping degree requirements for most state jobs.

Here’s what HR should know about these two pieces of state legislation.

California enacts law to prevent automatic stays of litigation in arbitration cases. On Oct. 10, California Gov. Gavin Newsom signed a bill into law that will prevent automatic stays of litigation when an “appeal of an order dismissing or denying a petition to compel arbitration” is pending.

Under existing law, proceedings are generally stayed when such an appeal is filed, up until the appeal is “perfected,” meaning it has been prepared for hearings by an appellate court. Under this change, which takes effect Jan. 1, 2024, trial court proceedings will not be automatically stayed when appeals of such orders are pending, per the text of the bill.

The modification could force California employers to continue to litigate employment claims in court, rather than carry them out through arbitration, attorneys with law firm Ogletree Deakins wrote in a blog post.

Arbitration is a favored method among companies to settle employment disputes, and it grew in popularity during the Covid-19 pandemic. Closed employment arbitration cases grew from over 3,000 in 2017 to about 5,000 in 2020, according to a report by the American Association for Justice. Employees subject to forced arbitration are unlikely to win their cases, and in recent years the practice has been scrutinized by lawmakers. The federal government passed a law last year that bars employers from using mandatory arbitration in sexual assault or harassment cases.

Attorneys with law firm Fisher Phillips expressed concern about the legislation in a blog post. “By allowing litigants to continue trial court proceedings pending appeal, we could see substantial judicial inefficiencies that arguably undercut the benefits of arbitration,” partner Hannah Sweiss wrote. “The theory supporting arbitration is that it can provide a more efficient—and in some instances, a less financially burdensome—alternative to litigation in court.”

Minnesota drops degree requirements for most state jobs. Minnesota Gov. Tim Walz signed an executive order on Oct. 30 that will eliminate college degree requirements for more than three-quarters of state government jobs.

“In Minnesota, if you’re qualified for a state job, then you have a fair chance at competing for it—with or without a 4-year degree,” Walz wrote on X.

Minnesota state agencies employ nearly 38,000 workers, but college degree requirements may serve as a barrier to job opportunities, according to the order signed by Walz. In an effort to better recruit, advance, and retain a necessary workforce, the governor directed Minnesota’s office of management and budget to “update guidance on the hiring process that emphasizes skills and work experience.” Degree requirements should only be listed as a minimum qualification if certain state or federal licensures or certifications are required for a job by law.

The order is part of a push by public and private sector entities to drop degree requirements in favor of skills-based hiring. At least 16 states didn’t require a four-year degree for most jobs as of Oct. 4, and employers like Walmart have said they’re rethinking education requirements for open jobs as well.