Businesses are constantly challenged by the ever-evolving landscape of labor and employment law, with new legislation and judicial developments occurring almost daily fueling a seemingly never-ending stream of litigation. For companies operating in multiple states, complying with this patchwork of federal, state, and local laws and developments can be daunting. Knowing these issues are a top concern for management and in-house counsel, Morrison Foerster keeps pace with this rapidly evolving landscape. MoFo ELC equips our clients with the most up-to-date and relevant information on employment and labor law issues covering key judicial, litigation and legislative developments, their implications for employers, and strategies to ensure compliance and avoid lawsuits.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Co-Chair, Global Employment and Labor Practice

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Andrew Turnbull represents companies on a broad range of labor and employment litigation and counseling matters. He has successfully defended clients in complex employment litigation before federal and state courts and administrative agencies. A primary focus of his practice involves helping companies navigate the unique employment issues that arise when doing business with the federal government, including advising on all aspects of OFCCP compliance, creating and implementing affirmative action plans, defending OFCCP audits and onsite investigations, conducting mock pay equity audits, drafting and developing business ethics policies and programs, and complying with the Service Contract Act, E-Verify, and the Drug Free Workplace Act.

Andrew Turnbull

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MoFo ELC equips our clients with the most up-to-date and relevant information on employment and labor law issues, covering key judicial, litigation, and legislative developments, their implications for employers, and strategies to ensure compliance and avoid lawsuits. To learn more about our capabilities, please visit the <a href="https://www.mofo.com/capabilities/employment-labor" target="_blank">Employment + Labor</a> practice page and read about our <a href="https://www.mofo.com/people?practices=Employment%20%2B%20Labor" target="_blank">Team</a>.

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Fourth Circuit Stays Injunction of Trump DEI Executive Orders

President Trump Rescinds Affirmative Action for Federal Contractors and Requires Enforcement Plan to End Unlawful DEI at Private Companies

FAR Council Withdraws “Pay Equity and Transparency” Proposed Rule

The “Preventative Duty”: New Law Places Active Duty on Employers in the UK to Prevent Sexual Harassment in the Workplace

Good News for Employers: Texas Court Blocks FTC’s Non-Compete Ban

On March 19, 2020, California Governor Gavin Newsom issued a statewide <a href="https://www.gov.ca.gov/2020/03/19/governor-gavin-newsom-issues-stay-at-home-order/">Stay at Home Order</a>, California Executive Order No. N-33-20 (“Order”), in response to the growing COVID-19 pandemic. The Order is effective immediately and shall stay in place until further notice.The Order calls for all California residents “to stay at home or at their places of residence except as needed to maintain continuity of operations of the federal critical infrastructure sectors.” The Order clarifies, however, that Californians working in “critical infrastructure sectors” as identified by the federal Cybersecurity & Infrastructure Security Agency (CISA) or the governor “may continue their work.” The Order cautions residents who need to leave their homes to “practice social distancing” at all times.Critical Infrastructure SectorsThe Order cites to CISA’s March 19, 2020 <a href="https://www.cisa.gov/sites/default/files/publications/CISA-Guidance-on-Essential-Critical-Infrastructure-Workers-1-20-508c.pdf">Memorandum on Identification of Essential Critical Infrastructure Workers During COVID-19 Response</a> (the “CISA Memorandum”) and to CISA’s web page on <a href="https://www.cisa.gov/identifying-critical-infrastructure-during-covid-19">Critical Infrastructure Sectors</a> for guidance on the types of businesses and industries that are exempt from the order. The CISA Memorandum provides detailed information regarding what classes of workers qualify as critical within the following sectors:<ol><li>Healthcare/Public Health</li><li>Law Enforcement, Public Safety, First Responders</li><li>Food and Agriculture</li><li>Energy</li><li>Water and Wastewater</li><li>Transportation and Logistics</li><li>Public Works</li><li>Communications and Information Technology</li><li>Other Community-Based Government Operations and Essential Functions</li><li>Critical Manufacturing</li><li>Hazardous Materials</li><li>Financial Services</li><li>Chemical</li><li>Defense Industrial Base</li></ol>Stay Home Except For Essential ServicesThe <a href="https://www.gov.ca.gov/2020/03/19/governor-gavin-newsom-issues-stay-at-home-order/">press release</a> for the Order posted on the governor’s website also links to a new page at www.covid19.ca.gov entitled “<a href="https://covid19.ca.gov/stay-home-except-for-essential-needs/">Stay home except for essential needs</a>,” which provides guidance about the Order. In addition to the critical infrastructure sectors identified by CISA, the guidance states that businesses that provide “critical government services, schools, childcare, and construction, including housing construction” are exempt from the Order. It also states that the following businesses providing essential services will remain open:<ol><li>Gas stations</li><li>Pharmacies </li><li>Food: Grocery stores, farmers markets, food banks, convenience stores, take-out and delivery restaurants </li><li>Banks</li><li>Laundromats/laundry services</li></ol>The following businesses, however, must close:<ol><li>Dine-in restaurants</li><li>Bars and nightclubs</li><li>Entertainment venues</li><li>Gyms and fitness studios</li><li>Public events and gatherings</li><li>Convention centers</li></ol>Potential Liabilities for Violations of the OrderEmployers could face various liabilities if they require employees to report to work in violation of the Order or take adverse action against them for refusing to report. Employers violating the Order can face penalties under California “Government Code section 8665” and various sections of the California Health & Safety Code.[i]  In addition, California Labor Code § 1102.5(c) prohibits employers from retaliating against “an employee for refusing to participate in an activity that would result in a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation” or who reports potential violations of law to either the employer or government agencies. Noncompliance can result in penalties of up to $10,000 per violation in addition to penalties available under other laws and typical remedies available in wrongful termination cases.[ii] Employees discharged for refusing to come to work in violation of the Order may also have claims for termination in violation of public policy, a.k.a. Tameny claims, since that action could arguably contravene the “substantial public policy principle[s]” behind the Order.[iii] Workers compensation laws may also not preempt claims for employees experiencing workplace injuries or illnesses, including emotional distress, stemming from public policy violations.[iv]What Employers Should DoEmployers should first determine how their business is impacted by the Order. Employers providing essential services are allowed to remain open, while bars, dine-in restaurants, and others are expressly required to close. Many other employers will need to determine if they provide critical infrastructure services exempt from the Order based on the <a href="https://www.cisa.gov/publication/guidance-essential-critical-infrastructure-workforce">CISA Memorandum</a>, the “<a href="https://covid19.ca.gov/stay-home-except-for-essential-needs/">Stay Home Except For Essential Needs</a>” webpage, and the most recent available guidance from the California governor’s office.  Businesses that must close should determine whether their employees can work from home or consider other options. For example, employees affected by this Order may be entitled to paid leave under the recently passed Families First Coronavirus Response Act, which we discuss in more detail <a href="https://elc.mofo.com/topics/families-first-coronavirus-response-act-paid-family-sick-leave.html">here</a>. Furloughed or laid-off employees may also be entitled to unemployment insurance benefits.California employers should be mindful that the California governor has partially suspended the California WARN Act, which would have required 60 days’ notice for any mass layoffs, terminations, or relocations, but employers are still required to provide as much notice as practicable, as discussed in our post <a href="https://elc.mofo.com/topics/Employers-Get-Temporary-Relief-From-the-California-WARN-Act.html">here</a>.  Several other states and localities have also recently issued similar “stay at home” or “shelter in place” orders. Local orders within California may be enforceable under the same laws criminalizing violation of the statewide Order, and other states may have similar or alternative enforcement mechanisms.[i] Cal. Health & Safety Code §§ 120125, 120140, 131080, 120130(c), 120135, 120145, 120175, 120150.[ii] Cal. Labor Code § 1102.5(f).[iii] Tameny v. Atl. Richfield Co., 27 Cal. 3d 167 (1980).[iv] Livitsanos v. Superior Court, 2 Cal. 4th 744 (1992) (holding Tameny claims exempt from preemption by state workers’ compensation laws).

Implications of California’s Coronavirus Stay at Home Order for Employers

Andrew co-chairs the firm’s Global Employment and Labor Group. He represents companies on a broad range of labor and employment litigation and counseling matters, successfully defending clients in number complex matters before federal and state courts and administrative agencies.

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Implications of California’s Coronavirus Stay at Home Order for Employers

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On March 19, 2020, California Governor Gavin Newsom issued a statewide Stay at Home Order, California Executive Order No. N-33-20 (“Order”), in response to the 

In the UK Government’s latest Budget, delivered on 11 March 2020, it was announced that the changes to the off-payroll working rules (also known as IR35) previously announced at Budget 2018 would apply to the private sector from 6 April 2020. The rules require businesses that use the services of individuals in the UK that are provided through an intermediary to determine whether there is, in fact, a deemed employment relationship and, if so, to deduct income tax and National Insurance contributions accordingly. Following the rapidly changing developments caused by the outbreak of Covid-19, the UK Government announced on 17 March 2020 that the implementation of the new off-payroll working rules will now be deferred by a year, until 6 April 2021.[1] A statement from Steve Barclay, chief secretary to the Treasury, confirmed: “This is a deferral in response to the ongoing spread of Covid-19, to help businesses and individuals. This is a deferral, not a cancellation, and the government remains committed to reintroducing this policy.”Read our <a href="https://www.mofo.com/resources/insights/200320-ir35-update-employment-language.html">client alert</a>.

IR35 Update: UK Government Postpones “Off-Payroll Working” Reforms


Trevor has over 30 years of experience in providing corporate and international tax advice. His practice focuses on advising client on the tax planning aspects of international transactions and strat

Trevor James

Trevor L James

Managing Partner, London

Annabel is a partner at Morrison Foerster and co-Managing Partner of the London office.

Annabel Gillham

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Oliver Spratt is Of Counsel based in the London office of Morrison Foerster. 

Oliver Spratt

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IR35 Update: UK Government Postpones “Off-Payroll Working” Reforms

FDA’s COVID-19 Product Regulation Enforcement Roadmap

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In the UK Government’s latest Budget, delivered on 11 March 2020, it was announced that the changes to the off-payroll working rules (also known as IR35) previo

On March 17, 2020, the Office of Federal Contract Compliance Programs (“OFCCP” or the “Agency”) issued a <a href="https://www.dol.gov/sites/dolgov/files/OFCCP/National-Interest-Exemption-Memo-Coronavirus-Relief-Efforts.pdf">National Interest Exemption memorandum</a> providing a limited, three-month exemption to new supply and service and construction contracts entered into specifically to provide Coronavirus relief.  The exemption waives some of the affirmative action requirements typically included in government contracts.Read more on the <a href="https://govcon.mofo.com/labor-employment/ofccp-issues-national-interest-exemption-for-new-coronavirus-relief-contracts/">Government Contracts Insights</a> blog.Morrison & Foerster associate Victoria Dalcourt Angle contributed to the writing of this post.<div id="content" class="columns large-8 medium-8" style="box-sizing: inherit;margin-top: 0px;margin-right: 0px;margin-bottom: 0px;margin-left: 0px;padding-top: 0px;padding-right: 3em;padding-bottom: 0px;padding-left: 0.9375em;width: 714.656px;float: left;position: relative;border-right-width: 1px;border-right-style: solid;border-right-color: rgb(170, 170, 170);color: rgb(77, 77, 79);font-family: Georgia, Times, "Times New Roman", serif;font-size: 16px;text-align: left;"><div class="entry-content" style="box-sizing: inherit;margin-top: 0px;margin-right: 0px;margin-bottom: 0px;margin-left: 0px;padding-top: 0px;padding-right: 0px;padding-bottom: 0px;padding-left: 0px;"><div></div></div><div class="entry-meta-footer" style="box-sizing: inherit;margin-top: 0px;margin-right: 0px;margin-bottom: 0px;margin-left: 0px;padding-top: 0px;padding-right: 0px;padding-bottom: 0px;padding-left: 0px;"></div></div><div id="secondary" class="data-equalizer-watch widget-area columns large-4 medium-4" style="box-sizing: inherit;margin-top: 0px;margin-right: 0px;margin-bottom: 0px;margin-left: 0px;padding-top: 0px;padding-right: 0.9375em;padding-bottom: 0px;padding-left: 3em;width: 357.328px;float: right;position: relative;color: rgb(77, 77, 79);font-family: Georgia, Times, "Times New Roman", serif;font-size: 16px;text-align: right;"></div>

OFCCP Issues National Interest Exemption for New Coronavirus Relief Contracts

Associate

Tori Dalcourt Angle is an associate in the Government Contracts practice in Morrison Foerster’s Washington, D.C. office.
Tori advises clients on various government contract matters, including both pre

Victoria Dalcourt Angle

Victoria Angle

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OFCCP Issues National Interest Exemption for New Coronavirus Relief Contracts

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On March 17, 2020, the Office of Federal Contract Compliance Programs (“OFCCP” or the “Agency”) issued a National Interest Exemption memorandum providing a limi

On March 18, 2020, President Trump signed into law the <a href="https://www.congress.gov/bill/116th-congress/house-bill/6201/text" target="_blank">Families First Coronavirus Response Act</a> (“FFCRA”). The new law expands the Family and Medical Leave Act (“FMLA”) to provide up to 12 weeks of paid family leave for employees who must care for a minor child due to a school or caregiver closure as a result of the COVID-19 pandemic. The FFCRA also provides employees up to 80 hours of paid sick leave that they may use for self-care or family-care in response to the pandemic. A number of key changes were made to <a href="/topics/After-Striking-Deal-with-the-President-the-House-of-Representatives-Passes-Federal-Relief-Bill.html">the earlier version of the bill passed by the House of Representatives on March 14, 2020</a>, including eligibility for leave, leave caps, and removal of the provision prohibiting employers from revising their own sick leave policies.The FFCRA is the first federal law requiring private employers with fewer than 500 employees to provide paid sick leave or paid family leave to employees. The law does not address whether employees at related entities, such as subsidiaries, parents, or affiliates, might be aggregated to be exempt from coverage. If covered under the FFCRA, employers must provide: (1) paid family leave to employees who have been employed for 30 or more days if they are unable to work because their minor child’s school is closed or childcare is unavailable due to COVID-19; and (2) paid sick leave to all employees for certain qualifying emergencies related to COVID-19. Covered employers are entitled to a tax credit each quarter equal to 100 percent of the wages they pay for leave required by the FFCRA. Employers can face civil penalties for taking adverse action or retaliating against employees who use FFCRA-required leave or complain about violations of the law.The new paid family and sick leave will take effect on April 2, 2020 and expire on December 31, 2020. The United States Secretary of Labor is expected to issue a model notice of the requirements for emergency paid sick leave for employers to post by March 25, 2020, and to issue additional guidance on or before April 2, 2020.We provide further details below about the new paid leave, financial assistance, and tax credits available to employers.Emergency Family and Medical Leave ExpansionThis provision expands FMLA to provide for paid family leave referred to in the FFCRA as “public health emergency leave” as follows:<ul><li>Covered Employers:<ul><li>The public health emergency leave applies to employers with “fewer than 500 employees” rather than “50 or more employees” applicable for other qualifying FMLA absences.</li><li>Employers with employees who are “health care providers” or “emergency responders” may elect to exclude those employees from being eligible for public health emergency leave.</li><li>The U.S. Department of Labor can exempt employers with fewer than 50 employees in certain circumstances.</li></ul></li><li>Eligible Employees:<ul><li>Employees must have been employed for at least 30 calendar days at the time that they need to take the “public health emergency” leave.</li><li>“Qualifying need related to a public health emergency” is defined as: <ul><li>The employee is unable to work (or telework) due to a need for leave to care for the employee’s child (under 18 years old) if the school or place of care has been closed, or if the childcare provider for the son or daughter is unavailable due to a public health emergency.</li></ul></li><li>A “public health emergency” is “an emergency with respect to COVID-19 declared by a Federal, State, or local authority.”</li></ul></li><li>Amount of Leave:<ul><li>Employees are entitled to take up to 12 weeks of leave for “a qualifying need related to a public health emergency.” </li></ul></li><li>Required Compensation:<ul><li>The first 10 days of paid family leave may consist of unpaid leave. Employees may substitute other paid leave that they might have available, such as accrued vacation, personal leave, or other paid sick leave.</li><li>After the initial 10 days, employers must provide paid leave for each day an employee takes paid family leave.</li><li>Employers must provide paid family leave at the greater of the following rates: (1) two-thirds (2/3) of the regular rate of pay for the number of hours usually worked by the employee; or (2) the minimum wage applicable to the employee.</li><li>Paid family leave is capped at $200 per day, or $10,000 in the aggregate, for the full 12 weeks of leave.</li><li>Employers are not required to pay for unused paid family leave upon termination of employment.</li></ul></li><li>Job Restoration:<ul><li>Covered employers with 25 or more employees must restore employees returning from paid family leave to their same or equivalent position. Employers with fewer than 25 employees are exempt from this requirement if: <ul><li>the employee’s position no longer exists because of economic or other changes to the employer’s operations related to the COVID-19 crisis;</li><li>The employer makes “reasonable efforts” to restore the employee to an equivalent position; and</li><li>If no positions are available, the employer makes additional reasonable efforts to contact the employee if an equivalent position becomes available.</li></ul></li></ul></li></ul>Emergency Paid Sick LeaveThis provision creates a new federal-level paid sick leave, as follows:<ul><li>Covered Employers:<ul><li>Employers employing fewer than 500 employees. </li><li>Employers with employees who are “health care providers” or “emergency responders” may elect to exclude those employees from the paid sick leave provisions.</li><li>The U.S. Department of Labor can exempt employers with fewer than 50 employees in certain circumstances.</li></ul></li><li>Eligible Employees:<ul><li>Employees are eligible for paid sick leave if they are unable to work (or telework) because:<ol><li>They are subject to a federal, state, or local quarantine or isolation order related to COVID-19</li><li>They have been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19.</li><li>They are experiencing symptoms of COVID-19 and are seeking a medical diagnosis.</li><li>They are caring for individuals who are subject to an order as described above in (1), or have been advised as described above in (2).</li><li>They must take care of their children if their children’s school or childcare provider is closed, or unavailable, due to COVID-19 precautions.</li><li>They are “experiencing any other substantially similar condition, specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.”</li></ol></li><li>Use of paid sick leave must be available immediately for any of the reasons described above, regardless of how long the employee has been employed by the employer.</li></ul></li><li>Amount of Leave:<ul><li>Full-time employees can take up to 80 hours of paid sick leave.</li><li>Part-time employees are eligible for paid sick leave equivalent to the number of hours that they work, on average, over a 2-week period.</li><li>Paid sick leave is not carried over from year to year.</li></ul></li><li>Required Compensation:<ul><li>Employers must pay employees at their regular rate of pay, up to $500 per day, or $5,110 total, for all qualifying leave related to a quarantine or isolation order, advice by a health care provider to self-quarantine, or seeking medical diagnosis due to experiencing COVID-19 symptoms.</li><li>Employers must pay employees two-thirds (2/3) of their regular rate of pay, up to $200 per day, or $2,000 total, for all qualifying leave related to family-care or childcare, or if the employee is experiencing another substantially similar illness (as specified by HHS).</li><li>Paid sick leave is in addition to other legally required sick leave.</li><li>Employers are not required to pay for unused paid sick leave upon termination of employment.</li></ul></li><li>Additional Requirements:<ul><li>Employers must post a notice of the paid sick leave requirements for employees. The notice must be posted in conspicuous places on the premises of the employer where notices to employees are customarily posted.</li><li>Employers cannot condition paid sick leave upon an employee finding or searching for another employee to replace the employee while he or she is using sick leave.</li><li>Employers cannot require employees to use other paid leave provided by the employer before using paid sick leave under the FFCRA.</li></ul></li></ul>Tax Credits and Financial Assistance<ul><li>The FFCRA provides financial assistance to employers to pay for these new benefits. Specifically, Division G of the legislation provides employers with quarterly tax credits for wages they pay employees for providing paid family and sick leave required by the FFCRA. </li><li>The FFCRA also provides $1 billion in 2020 for emergency grants to states for activities related to processing and paying unemployment insurance benefits, interest free loans to states to pay regular unemployment insurance benefits, and technical guidance to states that would set up work-sharing programs, in which employers reduce hours instead of laying off employees. Employees would receive partial unemployment benefits to offset the wage losses. Finally, the FFCRA provides for 100% funding of extended unemployment benefits to states with higher than normal rates of unemployment.</li></ul>As we all know, the situation is developing rapidly, seemingly by the minute. Please keep checking our blog for employment-related developments.

President Trump Signs the Families First Coronavirus Response Act into Law, Creating Paid Family and Sick Leave for Employees

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President Trump Signs the Families First Coronavirus Response Act into Law, Creating Paid Family and Sick Leave for Employees

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On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (“FFCRA”). The new law expands the Family and Medical Leave Act (

In response to the ongoing disruption caused by the growing coronavirus pandemic, California Governor Gavin Newsom issued Executive Order N-31-20 (the “Executive Order”) temporarily suspending the 60-day notice requirements and liabilities under the California Worker Adjustment and Retraining Notification Act (“Cal-WARN”) for layoffs caused by COVID-19. The Executive Order is subject to certain conditions, but employers struggling to respond to the evolving COVID-19 crisis will not trigger liabilities under Cal-WARN if they have to conduct layoffs or furloughs without providing the full 60-day advance notice.Q:  When Does Cal-WARN Apply?Cal-WARN applies when an employer has a mass layoff, termination, or relocation at a “covered establishment” in California with 75 or more employees. <ul><li>A “mass layoff” occurs when an employer terminates at least 50 employees at the covered establishment within a 30-day period due to lack of funds or work.</li></ul><ul><li>A “termination” occurs when there is a “cessation or substantial cessation of industrial or commercial operations in a covered establishment.”</li></ul><ul><li>A “relocation” occurs when an employer moves all or substantially all of its operations at a covered establishment to a different location 100 miles or more away. </li></ul>When Cal-WARN is triggered, employers must provide at least 60-days’ advance notice to affected employees and certain state and local officials before conducting the mass layoff, termination, or relocation. Failure to provide the mandated notice exposes employers to liability for back pay (up to 60 days), the value of benefits for affected workers, civil penalties of up to $500 per day (which can be recovered under PAGA), and attorney fees.Under Cal-WARN (unlike the federal WARN Act) there is no minimum period for the layoff. Courts have found that even a “brief” layoff is sufficient to trigger the notice obligations under Cal-WARN. In other words, if an employer furloughs 50 employees or more at a “covered establishment” even for a few days or weeks, the 60-day notice obligation would be triggered unless one of the limited exceptions to Cal-WARN applies. Because there is no temporary grace period under Cal-WARN, employers have been scrambling to figure out whether they need to provide Cal-WARN notices in light of the increasing number of businesses being forced to temporarily close their doors or furlough employees. The only possible exception under Cal-WARN that could apply to the closures caused by the coronavirus is the exception for layoffs “necessitated by a physical calamity.” However, it is far from clear whether the current COVID-19 emergency would qualify as a “physical calamity.”Q:  How Does the Executive Order Affect Cal-WARN’s Requirements?The Executive Order temporarily suspends the Cal-WARN obligation to provide 60-day prior notice of a mass layoff, relocation, or termination “caused by COVID-19-related ‘business circumstances’” and relieves employers of the Cal-WARN liabilities for damages and civil penalties. Although employers covered by the Executive Order need not provide 60-days’ advance notice, they must still:<ul><li>Provide “as much notice as is practicable,” including a brief statement of the basis for reducing the notification period; and</li></ul><ul><li>Ensure their written notices contain the following statement: “If you have lost your job or been laid off temporarily, you may be eligible for Unemployment Insurance (UI). More information on UI and other resources available for workers is available at labor.ca.gov/coronavirus2019.”</li></ul>The Executive Order applies retroactively to March 4, 2020, and extends through the end of the current COVID-19 emergency, which remains undetermined. The Executive Order also requires the California Labor and Workforce Development Agency to provide additional guidance on the order by March 23, 2020. Q:  What Should My Business Do Now?California employers now have some much-needed breathing room to assess the rapidly evolving situation without incurring liability for not immediately providing Cal-WARN notices. Businesses who need to conduct layoffs or furlough employees due to COVID-19 pandemic should first assess whether those actions would trigger the 60-day notice requirements under Cal-WARN. If Cal-WARN is triggered, employers should consider taking the following steps:<ul><li>Document the action is due to “COVID-19 related ‘business circumstances’”;</li></ul><ul><li>Provide the required Cal-WARN notices as soon as reasonably practicable to the affected employees, their union if they are represented, the California Employment Development Department, the chief elected official of the city and county government where the termination, relocation, or mass layoff occurs, and the applicable local workforce investment board; and</li></ul><ul><li>Ensure the notices contain the language required by the federal WARN Act, a brief statement of the reasons for reducing the notification period, and the statement above concerning employee eligibility for unemployment insurance.</li></ul>For more information about how employers should respond to of the growing COVID-19 pandemic, please refer to our prior client alert on this topic, available <a href="https://www.mofo.com/resources/insights/200131-coronavirus-employers.html?utm_source=publication&utm_medium=email">here</a>. If you need more specific guidance, feel free to contact one of the members of our <a href="https://www.mofo.com/capabilities/employment-labor.html">Employment and Labor Group</a>.

Employers Get Temporary Relief From the California WARN Act

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Employers Get Temporary Relief From the California WARN Act

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In response to the ongoing disruption caused by the growing coronavirus pandemic, California Governor Gavin Newsom issued Executive Order N-31-20 (the “Executiv

In the wee hours of Saturday, March 14, 2020, the House of Representatives passed H.R. 6201, the Families First Coronavirus Response Act, three days after its introduction. Of primary interest to employers, if enacted, the bill would expand the Family and Medical Leave Act (FMLA) to include emergency FMLA leave to employers with 1 to 500 employees. The bill would also create emergency paid sick leave, provide tax credits to employers to finance these benefits, and provide additional federal funding to the states for unemployment insurance benefits. To become law, the House bill must also pass the Senate and be signed by the president. Although the White House worked with the House on the final version of the bill and President Trump has endorsed its enactment, as of Monday morning, March 16, the Senate had not yet scheduled a time to take up the bill. The final version of the bill – introduced just one half-hour before its passage – does not include the payroll tax suspension that the president wanted. The Democrats also did not get all that they wanted in the bill; it omits the permanent paid sick leave mandate for public health emergencies that was contained in the original version and, instead, provides paid sick leave only for the current COVID-19 pandemic.Although the bill includes relief beyond employment issues, here, we analyze only the employment-related provisions.Division C – Emergency Family and Medical Leave Expansion Act This act would amend the FMLA as follows:<ul><li>Employees would be entitled to 12 weeks of leave for “a qualifying need related to a public health emergency.” The provision expires on December 31, 2020.</li><li>Paid sick leave may be provided for certain periods of leave related to a qualifying need related to a public health emergency. (See discussion of paid sick leave below.)</li><li>To be eligible for this public health emergency leave, employees would have to have been employed for at least 30 calendar days.</li><li>The employer size threshold public health emergency leave would be “fewer than 500 employees” rather than “50 or more employees” applicable for all other FMLA leaves.</li><li>“Qualifying need related to a public health emergency” is defined as: <ul><li>Complying with a recommendation or order of a public official or healthcare provider on the basis that: <ul><li>The physical presence of the employee on the job would jeopardize the health of others because of either exposure to the Coronavirus or exhibition of symptoms of Coronavirus by the employee; or</li><li>The employee is unable to both perform the functions of his or her position and comply with the applicable recommendation or order.</li></ul></li><li>To care for a family member where a public official or healthcare provider determine that the presence of that family member would jeopardize the health of other individuals in the community because of either exposure to the Coronavirus or exhibition of symptoms of Coronavirus; or</li><li>To care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the childcare provider of such son or daughter is unable to care for the child due to a public health emergency.</li></ul></li><li>A public health emergency is an emergency with respect to Coronavirus declared by the federal, state, or local authority.</li><li>Relationship to paid leave: <ul><li>The first 14 days of leave may consist of unpaid leave.</li><li>Employees may substitute other leave for unpaid leave.</li><li>Employers shall provide paid leave for each day of leave related to coronavirus after the initial 14 days of leave.</li><li>Paid leave is equal to 2/3 of the regular rate of pay for the number of hours usually worked. </li></ul></li></ul>Division E – Emergency Paid Sick Leave Act<ul><li>This act would require employers to provide paid sick leave for: <ul><li>Self-isolation due to diagnosis of Coronavirus;</li><li>To obtain a medical diagnosis or care if the employee is experiencing the symptoms of Coronavirus;</li><li>To comply with a recommendation or order by a public official or a healthcare provider on the basis that the physical presence of the employee on the job would jeopardize the health of others because of: <ul><li>Exposure of the employee to Coronavirus; or</li><li>Exhibition of symptoms of Coronavirus by the employee</li></ul></li><li>To care for or assist a family member of the employee: <ul><li>Who is self-isolating because the family member has been diagnosed with Coronavirus;</li><li>Who is experiencing symptoms of Coronavirus and needs to obtain medical diagnosis or care; or</li><li>With respect to whom a public official or healthcare provider makes a determination that the presence of the family member in the community would jeopardize the health of other individuals in the community because of: <ul><li>Exposure of the family member to the Coronavirus; or</li><li>Exhibition of symptoms of Coronavirus by such family member: or</li></ul></li></ul></li><li>To care for the child of the employee if the school or place of care has been closed, or the childcare provider is unavailable, due to Coronavirus. </li></ul></li><li>Duration of paid sick leave: <ul><li>Full time employees – 80 hours.</li><li>Part-time employees – number of hours equal to the number of hours that the employee works, on average, over a 2-week period.</li></ul></li><li>No carryover from year to year.</li><li>Employers with existing paid sick leave policies: <ul><li>Paid sick leave under this act would be in addition to previously available sick leave.</li><li>Employers may not change their sick leave policies to avoid providing this additional sick leave.</li></ul></li><li>Use of paid sick leave must be available immediately for any of the reasons described above, regardless of how long the employee has been employed by the employer.</li><li>Employers may not require employees to use other paid leave provided by the employer before using paid sick leave.</li><li>Employers must post a notice of this act.</li><li>This act expires on December 31, 2020.</li><li>Covered employers are those employing fewer than 500 employees (for private entities or individuals) and those employing 1 or more employees (for public agencies or any other entities that are not private).</li><li>Required compensation: <ul><li>Except for when taking care of a family member or child (where the employee shall be compensated at 2/3 of the employee’s regular rate of pay), the employee shall receive his or her regular rate of pay or minimum wage (whichever is greater).</li></ul></li></ul>Additional Provisions<ul><li>If enacted, the bill would provide financial assistance to employers to pay for these new benefits. Specifically, Division G of the bill provides tax credits to employers for the paid sick and paid family and medical leave created by the bill.</li><li>The bill would provide $1 billion in 2020 for emergency grants to states for activities related to processing and paying unemployment insurance benefits, interest free loans to states to pay regular unemployment insurance benefits, and technical guidance to states that would set up work-sharing programs, in which employers reduce hours instead of laying off employees. Employees would receive partial unemployment benefits to offset the wage loss. Finally, the bill would provide for 100% funding of extended unemployment benefits to states with higher than normal rates of unemployment. </li></ul>

After Striking Deal with the President, the House of Representatives Passes Federal Relief Bill, the Families First Coronavirus Response Act

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After Striking Deal with the President, the House of Representatives Passes Federal Relief Bill, the Families First Coronavirus Response Act

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In the wee hours of Saturday, March 14, 2020, the House of Representatives passed H.R. 6201, the Families First Coronavirus Response Act, three days after its i

On March 11, 2020, the World Health Organization officially declared the worldwide outbreak of the novel coronavirus, COVID-19, a pandemic. As the ripple effects from COVID-19 continue to grow, employers are increasingly facing difficult questions about how to address temporary workplace closures as well as possible furloughs and reductions in force due to the looming economic impact of the spreading pandemic. When addressing these challenging issues, employers must be mindful not to inadvertently create wage and hour liabilities, fail to provide legally required notices to employees, or unilaterally change working conditions for unionized workers without bargaining with their union reps. Join us on March 13, 2020, at 12:30 PM (ET) / 9:30 AM (PT) for a webinar during which we will discuss practical strategies for dealing with these and other risks employers face due to the growing coronavirus pandemic. Register for the webinar <a href="https://www.veracast.com/webcasts/mofo/mcle_programs/53144044837.cfm">here</a>.Wage and Hour ConcernsMust employers continue to pay employees who are not coming to work for COVID-19-related reasons?If the employee is non-exempt, then the answer is “no.” Non-exempt employees need only be paid for actual hours worked. If the employee is exempt, then the answer is more complicated. Exempt employees must be paid on a salary basis, which is currently $684 per each seven-day workweek under federal law. With limited exceptions, employees must be paid the full salary for the entire workweek where they perform any work during any portion of that workweek. In other words, if an employee checks emails, participates in work calls, or generally works in any capacity, then he or she must be paid the full salary for that week. There are exceptions for: (i) full-day absences during which the employee is voluntarily absent (such as when the employer is open for business but the employee decides to stay home and performs no work during that day); and (ii) absences covered by a bona fide sick leave policy. If an exempt employee does not perform any work at all during a workweek, regardless of whether the absence is voluntary or involuntary, the employer need not pay the employee his or her salary for the week. Thus, if employees are furloughed for full workweeks, there should be no issue. The problem arises when the furlough starts or stops in the middle of a workweek.If an employer violates the rules and fails to pay full salary for a workweek during which a non-exempt employee performed work, then the employee’s exempt status may be jeopardized. If the violation is inadvertent and isolated, the exemption will not be lost as long as the employer reimburses the employee for any improper deductions. If the employer exhibits an intent not to pay exempt employees on a salary basis – as evidenced by a pattern of deducting wages from salary for individual days not worked – the employee can lose his or her exempt status for the period during which improper deductions were made. In addition, other employees in the same job classification who work for the same manager who made the improper deduction will also lose their exempt status.For any period during which an otherwise exempt employee is deemed non-exempt, the employer is liable for overtime pay at the premium rates normally enjoyed by non-exempt employees for all hours worked in excess of 40 in a workweek. The employer could also be liable for civil penalties – including treble damages for willful violations of the FLSA – and could expose itself to class action lawsuits, which remain popular with plaintiffs’ lawyers who may recover statutory attorneys’ fees if successful.When considering any pay stoppage or forced usage of accrued vacation or PTO, employers should also think about the possible retention, employee morale, or public relations impacts of such actions and weigh those concerns against the economic risks. May employers reduce employees’ pay or work hours due to economic effects from COVID-19?Employers may implement prospective wage reductions and work hours for non-exempt employees, as long as those reductions keep employees’ wages above the applicable minimum wage requirements. However, these wage reductions are made across the board for similarly situated employees in the same positions to avoid potential discrimination issues. In addition, certain state and local laws may require some advance notice period.For exempt employees, reductions to the weekly salary are generally not permissible because they must be paid the same minimum weekly salary for any workweek in which they perform work, regardless of the number of hours worked that workweek. There is a limited exception where employers can prospectively reduce an exempt employee’s future salaries and working hours because of a bona fide reduction in the amount of work. However, this practice must be occasional and related to long-term business needs or economic slowdown. What constitutes “occasional” remains an open question. Employers must also remain aware of any payment obligations arising under employment contracts or collective bargaining agreements (further discussed below).Potential WARN Act ImplicationsAre employers required to comply with the Worker Adjustment and Retraining Notification (“WARN”) Act for temporary furloughs or closures related to COVID-19?If an employer is covered by WARN and the layoff or closure is one that would qualify for the notices required under WARN, then yes, the employer would need to comply with WARN, regardless of the reason for the layoff or closure.  Generally, employers with 100 or more full-time employees who implement a “plant closing” or “mass layoff”[1] must provide at least 60 calendar days’ advance notice to employees affected by those closings or layoffs as well as their union reps (if any) and certain government entities. Violations of the WARN Act can result in harsh consequences, with employers being liable for up to 60 days of back pay and benefits as well as civil penalties of $500 per day.However, as may be the case for temporary furloughs or closures related to coronavirus, WARN notice is usually not triggered if employees are going to be laid off for less than six months because those employees have not suffered an “employment loss” requiring notice under WARN. It can be hard to know, however, whether a layoff will indeed only last six months or if the employer will become liable for not providing the necessary notices six months down the road.Employers may also not have to provide WARN notice if they can show that the layoff or closure is due to “unforeseeable business circumstances,” which can include an unforeseen, dramatic major economic downturn. It is possible that the effects of COVID-19 could create such circumstances. Even if the unforeseeable circumstances exception applies to this situation, employers relying on the exception must still provide “as much notice as practicable” as soon as the triggering event is foreseeable and provide a statement explaining the circumstances of why more extensive notice was not provided. Given that application of the exception tends to be highly fact-specific and the situation with coronavirus remains highly fluid, it might be less risky for an employer to simply provide the required notices.Employers should also be mindful that some states, such as California and New York, have their own mini-WARN laws that have different requirements and circumstances that may trigger or relieve providing advance notices.Unionized WorkforcesMust an employer give notice to the union if it wants to make changes to its unionized employees’ working hours or rate of pay due to the effects of COVID-19?Employers with unionized workers may have to bargain with the union before making changes to any terms or conditions of employment. The National Labor Relations Act requires employers to bargain in good faith with the union on mandatory subjects of bargaining, such as wages, schedules, temporary closures, and layoffs.  Making unilateral changes to those terms without first notifying the union and offering to bargain in good faith could lead to the union filing unfair labor charges. This duty to bargain in good faith can apply even in emergency circumstances, unless there are “compelling economic exigencies” or the parties have agreed to such changes in their collective bargaining agreements. Employers should check their collective bargaining agreements to see if there are any rights reserved in those agreements, such as in the management rights clause or a “force majeure” clause, which may give the employer more flexibility to act unilaterally. Employers should carefully interpret those provisions to see if the current coronavirus situation actually gives them the right to act unilaterally. Whether the coronavirus presents a “compelling economic” circumstance will depend the particular circumstances affecting each employer.  The safest route may be for employers to give the union notice and offer to bargain quickly on such terms.  [1] A plant closing is a permanent or temporary shutdown, resulting in an employment loss for at least 50 employees during a 30-day period, of either (i) a single site of employment; or (ii) facilities or operating units within a single site of employment. A mass layoff is a reduction in force that must both (i) not be the result of a plant closing; and (ii) result in an employment loss at a single site of employment during any 30-day period for either (a) 50 employees who comprise at least 33% of active employees; or (b) at least 500 employees. An employment loss is a (i) termination of employment that is not (a) discharge for Cause; (b) voluntary departure; (c) retirement; (ii) a layoff exceeding six months; or (c) a reduction in work hours of more than 50% during each month of a six-month period.

Coronavirus (COVID-19) for Employers: Leaves, Furloughs, and the WARN Act

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Coronavirus (COVID-19) for Employers: Leaves, Furloughs, and the WARN Act

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On March 11, 2020, the World Health Organization officially declared the worldwide outbreak of the novel coronavirus, COVID-19, a pandemic. As the ripple effect

Following the publication of our January 31, 2020 Client Alert, “<a href="https://elc.mofo.com/topics/coronavirus-steps-employers-should-be-taking.html">Coronavirus: Steps Employers Should be Taking</a>,” the Centers for Disease Control (“CDC”) and the Occupational Safety and Health Administration (“OSHA”) have issued new guidance for employers about how to respond to the recently discovered coronavirus, COVID-19.In addition, the mayor of San Francisco has declared a local emergency, announced <a href="https://protect-us.mimecast.com/s/-jefC1wBEMs04X83FygJSE?domain=sf.gov">here</a>. It also appears that California has a confirmed case of community transmission (someone who caught the virus locally from an unknown infected person). Although the number of confirmed cases in the U.S. remains small, the situation is fluid and employers should stay abreast of developments and guidelines as they are issued.  The latest recommendations follow.CDC UpdateThe CDC notes that for “the general American public, such as workers in non-healthcare settings and where it is unlikely that work tasks create an increased risk of exposures to COVID-19, the immediate health risk from COVID-19 is considered low.” Nevertheless, the CDC advises that employers take the following steps to reduce the risk of exposure:<ul><li>Encourage sick employees to stay home. <ul><li>In particular, those with respiratory illness are recommended to stay home until they are fever free for at least 24 hours. </li><li>To encourage employees to stay home when needed, employers should maintain flexible policies that permit employees to stay home when sick.</li><li>Symptom-free people with low-risk exposures are advised to self-observe until 14 days after their last potential exposure. </li><li>Employers may recommend that employees with low-risk exposures check their temperature before arriving at the workplace.</li></ul></li><li>Separate sick employees when possible, and encourage employees to practice good hand hygiene and coughing and sneezing etiquette. <ul><li>Posters, in particular, can be a helpful tool for informing employees about hygiene etiquette.  </li><li>Educational materials developed by the CDC, including fact sheets, posters, checklists, planning guides, videos, and podcasts, can be found online.</li><li>In addition, employers should provide disposable wipes so that employees may wipe down regularly used surfaces.</li></ul></li><li>Perform routine environmental cleaning, although no additional disinfection beyond routine cleaning is recommended at this time. </li><li>Be mindful of employee travel, and advise employees to check the CDC’s online health notices, check themselves for symptoms, and notify their supervisors if they travel to high-risk areas or become sick during travel.  <ul><li>Traveling employees should contact their healthcare providers if they need healthcare services while abroad and may contact consular offices for additional assistance finding healthcare resources abroad.</li></ul></li><li>Inform employees that if they live with individuals who have contracted COVID-19, they should inform their supervisors and refer to CDC guidance on how to conduct risk assessments.</li><li>Inform employees of possible exposure if those with whom they work have confirmed cases of COVID-19, and conduct risk assessments as needed, but maintain employee confidentiality as required by the Americans with Disabilities Act. </li></ul>Perhaps most importantly, the CDC specifically advises that employers “do not make determinations of risk based on race or country of origin, and be sure to maintain confidentiality of people with confirmed coronavirus infection.”The CDC further recommends that employers develop an Outbreak Response Plan. In doing so, employers should be mindful of the objectives of such plans, which typically include:<ul><li>Reducing transmission;</li><li>Protecting high-risk individuals;</li><li>Maintaining operations; and</li><li>Minimizing adverse effects on other businesses and consumers.</li></ul>When developing Outbreak Response Plans, the CDC recommends:<ul><li>Involving employees in the development and review of the plan;</li><li>Communicating with employees about policies and benefits that can be used to implement the plan;</li><li>Conducting focused analyses and exercises using the plan to identify potential gaps; and</li><li>Sharing best practices with other businesses.</li></ul>Effective Outbreak Response Plans should:<ul><li>Analyze exposure and health risks to employees;</li><li>Identify critical functions, roles, and supply chain elements, and prepare for the effects of increased absenteeism;</li><li>Incorporate human resource policies that are consistent with public health recommendations and with state and federal workplace laws;</li><li>Establish processes for communicating to employees and business partners about the Outbreak Response Plan;</li><li>Refer to plans developed by the communities in which the business operates;</li><li>Make note of channels of communication with state and local health departments and methods for disseminating local outbreak information;</li><li>Minimize exposure among employees and between employees and the public when called for by public officials;</li><li>Offer, where feasible and recommended by local health authorities, flexibility in work locations and work hours by, for example, permitting telecommuting or staggering shifts;</li><li>Limit or cancel non-essential travel to or from communities where outbreaks have been detected; and</li><li>Lay out procedures for activating and terminating the Outbreak Response Plan.</li></ul>OSHA GuidanceIn addition to CDC guidance, employers should be mindful of guidance from OSHA. OSHA’s general COVID-19 guidance can be found online. While OSHA has yet to develop standards specific to COVID-19, OSHA’s website identifies several existing standards that may be applicable, available online. Potentially applicable standards include those for:<ul><li>Recording and Reporting Occupational Injuries and Illness;</li><li>Personal Protective Equipment, specifically standards regarding: <ul><li>General requirements;</li><li>Eye and face protection;</li><li>Respiratory protection; and</li><li>Hand protection;</li></ul></li><li>General Environmental Controls, specifically standards regarding sanitation; and</li><li>Toxic and Hazardous Substances, specifically standards regarding: <ul><li>Access to employee exposure and medical records;</li><li>Bloodborne pathogens;</li><li>Hazard communication; and</li><li>Occupational exposure to hazardous chemicals in laboratories.</li></ul></li></ul>Notably, OSHA has stated that, unlike the common cold or the flu, COVID-19 is a recordable illness that should be reported in accordance with OSHA’s Injury and Illness Recordkeeping and Reporting Requirements.Employers should also be mindful of potentially applicable state plans, which can be found through OSHA’s website.Key TakeawaysAs with other communicable respiratory illnesses like the flu, employers should encourage sick employees to stay home to limit the risk of exposure to COVID-19. Businesses should also review their policies and develop Outbreak Response Plans that may be implemented in the event of an outbreak as advised by public officials.  Nevertheless, any response should be based upon facts, proportionate to the actual risks, and should be mindful of the need to remain compliant with existing employment and labor laws and regulations.Based on guidance from public health authorities, employers may want to consider temporary changes to their operating protocols, such as:<ul><li>Prohibiting business travel to or from high-risk areas;</li><li>Limiting non-essential travel;</li><li>Postponing large gatherings;</li><li>Reducing non-essential contact with business partners and clients;</li><li>Educating employees about risks and precautions as recommended by public officials;</li><li>Providing employees with tools to improve hygiene, such as hand sanitizers, disinfectant wipes, and tissues;</li><li>Recommending or requiring that employees with elevated risks of exposure to COVID‑19 work remotely for 14 days without symptoms before being permitted to return to the worksite;</li><li>Permitting other sick and high-risk individuals, such as those with other medical conditions, to work remotely, take time off, or work flexible hours as reasonably necessary.</li></ul>All businesses should be mindful of the public health risks associated with COVID‑19. Measured responses can protect employees and employers alike without running afoul of the law. Still, employers must remember that the discovery of the coronavirus does not relieve them of their existing obligations to their employees under the law. Listen to public officials and always be careful not to contravene laws protecting employees, such as prohibitions against discrimination, confidentiality protections, health and safety regulations, and employee leave laws, just to name a few.For more information about how employers should respond to the emergence of COVID-19, please refer to our prior client alert on this topic, available <a href="https://www.mofo.com/resources/insights/200131-coronavirus-employers.html?utm_source=publication&utm_medium=email">here</a>. If you need more specific guidance, feel free to contact one of the members of our <a href="https://www.mofo.com/capabilities/employment-labor.html">Employment and Labor Group</a>.

Updated Coronavirus (COVID-19) Guidelines For Employers

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Updated Coronavirus (COVID-19) Guidelines For Employers

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Following the publication of our January 31, 2020 Client Alert, “Coronavirus: Steps Employers Should be Taking,” the Centers for Disease Control (“CDC”) and the

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Eric Akira Tate co-chairs the firm’s Global Employment and Labor Group. He represents technology and other companies in bet-the-company trade secrets and employee mobility cases.

Eric Akira Tate

Eric Tate chairs the firm’s Global Employment and Labor Group. He has represented technology and other companies in the biggest and most highly-publicized trade secrets and employee mobility cases across multiple industries. Eric also represents companies in whistleblower, wage and hour, and other employment litigation.

Eric Tate

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Employment Law Trends to Watch in 2020

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Last year, jurisdictions across the nation issued new laws and regulations further complicating compliance

Employment Law Trends to Watch in 2020

A federal district court found that the new California law barring mandatory employment arbitration agreements is preempted by the Federal Arbitration Act (FAA). The court granted the challengers’ motion for preliminary injunction and barred the Attorney General (AG) from enforcing Assembly Bill (AB) 51.[1] The court’s order followed its grant of a temporary restraining order enjoining the AG’s enforcement of AB 51 while the parties litigated the preliminary injunction.[2]The Court’s RulingIn its preliminary injunction order, the court rejected two threshold matters raised by the AG, finding: 1) the organizations that filed the challenge had standing because they alleged that at least some of their members enter into arbitration agreements or require affirmative opt outs as a condition of employment and would be irreparably harmed if AB 51 goes into effect; and 2) the court had subject matter jurisdiction over suits challenging state statutes on federal preemption grounds.[3]Turning to the merits, the court found plaintiffs were likely to succeed on the merits of their preemption claim because “AB 51 places arbitration agreements on unequal footing with other contracts.”[4] Although AB 51 purports to bar the waivers of any “right, forum, or procedure,” the court found that “the primary target of the bill is agreements to arbitrate.”[5] The court quoted the Supreme Court in explaining: “AB 51’s prohibition on California employers’ use of ‘right, forum, or procedure’ waivers as a condition of employment ‘oh so coincidentally’ disfavors contracts with the ‘defining features’ of arbitration.”[6] That the law was “artfully crafted” to allow the AG to argue it regulates employer behavior did not avoid its effect of discriminating against arbitration agreements.[7]The court also found that AB 51 “interferes with the FAA’s goal . . . and is subject to preemption on this basis as well.”[8] The FAA, the court explained, reflects a broad federal policy approving of arbitration. But AB 51 will likely deter employers from using arbitration agreements, interfering with federal policy.[9]The court also found plaintiffs had demonstrated their members would experience irreparable harm absent injunctive relief because many businesses will have to choose between the risk of civil or criminal penalties and ending their use of arbitration agreements.[10] Such businesses “will incur immediate costs of redrafting their employment agreements to omit arbitration provisions and be unable to realize the cost and efficiency benefits they say arbitration provides.”[11] They likely cannot recoup those costs in a suit for damages because the AG is “immune from suit under sovereign immunity.”[12]Because the AG would suffer minimal harm – perhaps none, as the state has no interest in enforcing an unconstitutional law – and because Plaintiffs would suffer irreparable harm, the court found the balance of equities weighed in favor of granting the preliminary injunction.[13]Impact of the Court’s RulingIt remains to be seen whether the AG will appeal the preliminary injunction,[14] stipulate to entry of final judgment and appeal, or litigate the case to final judgment. In the meantime, employers want to know about the AG’s authority if they continue to enter into mandatory arbitration agreements and the preliminary injunction is later overturned by the Ninth Circuit or the Supreme Court. There is very little case law on the issue, but we believe employers would have a strong argument that even if the preliminary injunction is later overturned, the AG would not be able to pursue an action based on the employer’s entry into a mandatory arbitration agreement while the temporary restraining order or injunction was in effect. Employers would have to reevaluate those agreements on a going-forward basis if an appellate court were to lift the injunction.[1] Chamber of Commerce of the U.S. v. Becerra, No. 2:19-cv-02456-KJM-DB, 2020 WL 605877 (N.D. Cal. Feb. 7, 2020).[2] AB 51 provides for AG enforcement and also private rights of action by employees.[3] Id. at *6–9.[4] Id. at *11.[5] Id.[6] Id. at *12 (quoting Kindred Nursing Ctrs. Ltd. P’Ship v. Clark, 137 S. Ct. 1421, 1426 (2017)).[7] Id. at *12.[8] Id. at *13.[9] See id.[10] Id. at *16.[11] Id.[12] Id.[13] Id. at *18.[14] See 28 U.S.C. § 1292(a)(1).

Federal Court Preliminarily Enjoins the Attorney General from Enforcing AB 51, the New California Law Barring Mandatory Employment Arbitration Agreements

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Federal Court Preliminarily Enjoins the Attorney General from Enforcing AB 51, the New California Law Barring Mandatory Employment Arbitration Agreements

Not So Fast: Ninth Circuit Resurrects Ban On Mandatory Employment Arbitration Agreements

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A federal district court found that the new California law barring mandatory employment arbitration agreements is preempted by the Federal Arbitration Act (FAA)