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The United States Supreme Court held that class action waivers in mandatory employment arbitration agreements are valid and enforceable, rejecting arguments that such waivers violate the National Labor Relations Act (“NLRA”). The decision enveloped three cases: Epic Systems Corporation v. Lewis, Ernst & Young LLP v. Morris, and National Labor Relations Board v. Murphy Oil USA, Inc. In each of the three cases, employees signed arbitration agreements requiring them to arbitrate employment disputes individually, thus waiving their right to bring class and collective actions in court. However, the employees filed class and/or collective claims against their employers under the federal Fair Labor Standards Act and a number of state laws.
It is a familiar pattern to many employers: an employee takes a medical leave of absence that is subsequently extended for an indefinite period of time. Does the law require an employer to accommodate this indefinite leave of absence? Two recent federal cases provide much needed (employer-friendly) guidance.
The 2018 California legislative session has introduced numerous bills that, if signed into law, would impact California employers and employees. These bills include:
SB 224 (Jackson): This bill would amend the Unruh Civil Rights Act to include investors, elected officials, lobbyists, directors, and producers among other professionals who may be liable to a plaintiff for sexual harassment if the elements are proven. The bill passed the Senate and is currently in the state Assembly.
Section 13307 of the “Tax Cuts and Jobs Act,” which went into effect on December 22, 2017, amends section 162 of the Internal Revenue Code (“IRC”) pertaining to “ordinary and necessary” business expenses that may be deducted from income. Pursuant to new section 162(1) of the IRC, payments made pursuant to a confidential settlement of sexual harassment allegations are no longer permissible tax deductions for businesses. The new provision does not specify whether a company may deduct legal fees incurred before settlement, or whether some or all of the fees are deductible if there are claims in addition to a claim of sexual harassment. Employers are encouraged to consult with their tax advisors regarding the tax implications of any sexual harassment settlement.
In Douglas v. Xerox Business Services, the Ninth Circuit Court of Appeals (“Ninth Circuit”) clarified that the Fair Labor Standards Act (“FLSA”) permits minimum wage compliance to be measured by weekly per-hour averages.
“Ban the box” laws seek to restrict when an employer may consider criminal conviction history information concerning applicants for employment. Nationally, 29 states and over 150 cities and counties have enacted some type of “ban the box” law. Some of these laws only apply to government sector employers when they hire their own employees. However, nine states and 15 cities have gone further and adopted “ban the box” laws that apply to private sector employers. In California, this includes San Francisco and Los Angeles, which have already adopted their own local ordinances to “ban the box.”
Below is a summary of bills the California legislature passed that may impact California employers and employees. Governor Jerry Brown has until October 15, 2017 to sign or veto bills.
In McKeen-Chaplin v. Provident Savings Bank, the Ninth Circuit Court of Appeals (“Nint Circuit”) held that a group of mortgage underwriters were improperly classified as exempt. Gina McKeen-Chaplin (“McKeen-Chaplin”) was employed by Provident Savings Bank (“Provident”) as a mortgage underwriter, responsible for analyzing the viability of mortgage loan applications. While Provident’s mortgage underwriters were generally required to abide by a set of guidelines regarding loan worthiness, they exercised some leeway in applying those guidelines and, occasionally, were permitted to make suggestions outside of their bounds. Ultimate decisions regarding loan-worthiness, however, were ultimately made by higher ranking employees.
Effective July 1, 2017, California adopted new regulations governing an employer’s ability to seek out and consider information pertaining to employees’ and applicants’ criminal history. Below is a summary of the key points outlined in the regulations:
Pursuant to the California Labor Code’s “day of rest statutes” (Cal. Lab. Code sections 550-558.1), an employee cannot be required to work more than six consecutive days, unless that employee works fewer than 30 hours in a week and no more than six hours in a day during that span. In Mendoza v. Nordstrom, the California Supreme Court looked more closely at this legal standard to clarify that employers are only bound to abide by these provisions during each workweek, thereby alleviating the potential scheduling difficulty associated with coordinating compliance across multiple workweeks.
In Rizo v. Yovino, a math consultant sued the Fresno County Superintendent of Schools (“the County”) for violation of the federal Equal Pay Act, arguing that it was improper for the County to consider her prior salary history when setting her starting compensation. Federal law generally prohibits employers from paying employees of one sex more than employees of the other sex for performing the same work. However, a pay differential is permissible where it is based on: (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production; or (4) a differential in pay based on any factor other than sex.
The California Legislature is currently considering Assembly Bill (“AB”) 1565 (Thurmond). AB 1565 would add section 514.5 to the California Labor Code. The bill proposes to raise the minimum monthly salary to qualify for white-collar exempt status in California to $3,956. The minimum annual salary for exempt executive, administrative, or professional workers would be $47,472, or twice the state minimum wage, whatever is greater.
There are a number of pending bills, which, if passed and signed into law, would impact California employers and employees.
California Supreme Court Upholds $90 Million Class Action Judgment Against Employer who Required Employees to Remain “On-Call” During Rest Periods
On November 8,2016, California voters passed Proposition 64, also known as the “Adult Use of Marijuana Act.” As of November 9, 2016, it became legal for adults over 21 years old to possess and use marijuana for recreational purposes. Additional licensing and taxing provisions become effective January 1, 2018. Despite the legalization of recreational marijuana use, the law does not impact an employer’s right to maintain a drug and alcohol free workplace, require an employer to permit or accommodate the use of marijuana in the workplace, or affect an employer’s ability to have policies that prohibit the use of marijuana by employees and prospective employees.
In Penilla v. Westmont Corporation, a California Court of Appeal reaffirmed courts’ unwillingness to enforce arbitration agreements that are procedurally or substantively unconscionable. Although not an employment case per se, the court’s ruling contemplates the same issues that are analyzed in employment claims, highlighting the close judicial scrutiny given to arbitration agreements.
Governor Jerry Brown has signed Assembly Bill 1066 (Gonzalez), also known as the “Phase-In Overtime for Agricultural Workers Act of 2016.” Existing law sets wage, hour, meal break requirements, and other working conditions for employees, and requires an employer to pay overtime wages to an employee who works in excess of eight hours in a workday or 40 hours in a workweek. However, existing law exempts agricultural employees from these requirements, providing them overtime only when they work more than 10 hours in a workday or 60 hours in a workweek.
In Morris v. Ernst & Young, the Ninth Circuit Court of Appeals (“Ninth Circuit”) concurred with an administrative decision issued by the National Labor Relations Board (“NLRB”), in which the NLRB determined that class action waivers in employment arbitration agreements violate the National Labor Relations Act (“NLRA”). According to the Ninth Circuit and the NLRB, an employer cannot require an employee to waive his or her right to pursue class or collective claims, whether in arbitration or in court, for such a requirement defies the NLRA’s mandate that employees be permitted to engage in “concerted activity”—the right to work together to address workplace grievances.
The City of San Diego has published the required posters and employee notice for the Earned Sick Leave and Minimum Wage Ordinance, which took effect on July 11, 2016. Among other things, the Ordinance increases the City’s minimum wage to $10.50 per hour and requires employees who work at least two hours within the City’s geographical boundaries during a year to accrue paid sick leave.
On July 11, 2016, the San Diego City Council voted to adopt the June election results, rendering San Diego’s Earned Sick Leave and Minimum Wage Ordinance effective immediately. The ordinance sets the minimum wage for employees working within the city of San Diego at $10.50 per hour. On January 1, 2017, the City’s minimum wage will increase again to $11.50 per hour. Beginning in 2019, the local minimum wage will be tied to the Consumer Price Index and adjust as necessary based on the cost of living. Moreover, the ordinance requires employers to provide a more generous sick leave policy than required by state law (five days rather than three days).
Earlier this month, San Diegans voted to approve Proposition I, San Diego’s Earned Sick Leave and Minimum Wage Ordinance. The ordinance raises San Diego’s minimum wage above the state minimum wage and requires employers to provide a more generous sick leave policy than the state law mandates.
In Mendoza v. The Roman Catholic Archbishop of Los Angeles, a bookkeeper brought a disability discrimination claim under the Americans with Disabilities Act (“ADA”) against her employer, a small parish. The bookkeeper alleged that her employer engaged in discrimination by failing to offer her a full-time position upon her return from a ten-month leave of absence. The church argued that its pastor performed plaintiff’s duties while she was on leave and determined that the role could be fulfilled by a part-time employee. The church offered the bookkeeper a part-time role upon her return from leave, which she declined.
Governor Jerry Brown has signed into law SB 3 (Leno) which amends sections 245.5, 246, and 1182.12 of the Labor Code. The new law raises the state’s minimum wage to $10.50 per hour on January 1, 2017, and then annually thereafter until reaching $15.00 per hour on January 1, 2022. The timeline of minimum wage hikes for employers with fewer than 25 employees will run from January 1, 2018 to January 1, 2023.
The California legislature is currently considering various pieces of legislation that, if passed and signed into law by Governor Brown, may impact California’s employers as well as employees.
On January, 29, 2016 the Equal Employment Opportunity Commission announced that it was proposing revisions to the Employer Information Report to include pay data. The announcement took place on the seventh anniversary of the passage of the Lilly Ledbetter Fair Pay Act, a federal statute extending the time period for filing complaints of employment discrimination regarding compensation.
What better way to ring in the new year than to review some of the laws that impact California employers beginning in 2016. This is an opportune time for employers to review their policies and procedures regarding these recent changes.
In Garrido v. Air Liquide Industrial U.S. L.P., a California Court of Appeal determined that the rule set forth in Gentry v. Superior Court is still good law – at least in some situations.
Ninth Circuit Gives a Thumbs-Up to the California Supreme Court, Holds the Iskanian Decision Is Not Preempted by Federal Law, Employer Successfully Challenges PAGA Claim Based on Insufficient Notice Letter, California Court Appeal Instructs Trial Court to Re-Examine Its Denial of Class Certification
Legislature Amends PAGA to Limit Employers’ Exposure for Certain Technical Violations of the Labor Code; Court of Appeal Invalidates Employer’s Training Reimbursement Policy
Governor Signs Bill Clarifying That Employee Immigration Status is Irrelevant to Employer Liability for Illegal Conduct
Unpublished Opinion Demonstrates Viability of Discrimination and Harassment Claims Brought by Non-Minorities; Court of Appeal Affirms Order Denying Employer’s Motion to Compel Arbitration
California Paid Sick Leave Law Amended and Clarified; Appellate Court Holds Inability to Work for Particular Supervisor is Not a “Disability” Under the FEHA
EEOC Issues Proposed Regulations Regarding Employer Wellness Programs
Department of Labor Issues Final Rule Revising Definition of “Spouse” Under FMLA
California Supreme Court Punts on Viability of “Honest Belief” Defense
First Circuit Court of Appeals Protects Employer in ADA Claim Where Employee Fails to Engage in Interactive Process
U.S. Supreme Court Holds Employees Need Not be Compensated for Time Spent Waiting for Security Screenings
NLRA Reaffirms on D.R. Horton and Unenforceability of Class Action Waivers
Court of Appeal Holds That Trial Court, Not Arbitrator, Must Decide Class
New California Laws: Governor Jerry Brown signed into law a number of bills that will impact California employers.
Governor Brown Signs Bill Mandating Paid Sick Leave in California
Several bills that could impact California employers and employees are pending before the California legislature.
Ninth Circuit Rules that Home Delivery Drivers are Not Independent Contractors
California Supreme Court Issues Opinion Criticizing “Trial by Formula”
in Class Actions
Comments on Proposed CFRA Amendments Due by June 2nd
There are a number of bills in the legislature that, if signed into law, would impact California employers and employees.
The California Legislature is considering a number of bills which, if enacted, would impact California’s employers and employees. These bills include
California Court of Appeal Confirms That Sexual Harassment Need Not Be Motivated by Sexual Desire
Ninth Circuit Upholds Sizeable Attorneys’ Fee Award Despite Plaintiff’s Modest Victory
Ninth Circuit Denies Employer’s Petition to Compel Arbitration Pursuant to “Unconscionable” Arbitration Agreement
New Law Increases Minimum Wage
Employers Must Now Provide Notice Required by Patient Protection and
Affordable Care Act
New Law Confirms that Sexual Harassment Need Not Be Motivated by Sexual Desire
Court of Appeal Addresses Compensable Time Issues
U.S. Supreme Court Rules Defense of Marriage Act Unconstitutional, Effectively Nullifies California’s Proposition 8
U.S. House of Representatives Passes “Comp Time” Bill
Legislature Considers Bill Expanding Protections for Victims of Domestic Violence, Sexual Assault and Stalking
U.S. Citizenship and Immigration Services Publishes New I-9 Form
U.S. Department of Labor Issues Final Rule Expanding Family and Medical Leave Act Protections
Department of Fair Employment and Housing (“DFEH”) Begins Enforcing New Disability Regulations
Congress Avoids Fiscal Cliff by Passing American Taxpayer Relief Act
Department of Industrial Relations Announces 2013 Rates for Overtime
Governor Signs Bill Clarifying the Definition and Scope of “Sex” Under the FEHA
Governor Signs Bill Implementing New Social Media Privacy Rules
Bills Expanding the FEHA and the CFRA Lose Traction in the Senate
California Assembly Rejects Bill Targeting Class Action Waivers
House and Senate Seek to Lower Bar for Class Certification in Employment
Assembly Passes Bill Prohibiting Discrimination Against Unemployed Job Applicants
Assembly Bill Targets Use of Social Media By Employers During Hiring Process
Congress Targets Employee Misclassification with Fair Playing Field Act
Congress Approves Extension of Payroll Tax Cut
California Assembly Considers Raising Minimum Wage
IRS Announces 2012 Standard Mileage Rates