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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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

Potential Exceptions Under FTC’s Non-Compete Ban

IS TIME UP FOR THE SEVERE OR PERVASIVE STANDARD? HARASSMENT CLAIMS IN 2020 AND BEYOND

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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Cooper Spinelli is a member of the Litigation Department and part of the firm’s Employment & Labor Group. His practice focuses on trade secrets and restrictive covenants, employee mobility and executive disputes, whistleblower claims, and general business litigation.

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Cooper Spinelli

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IS TIME UP FOR THE SEVERE OR PERVASIVE STANDARD? HARASSMENT CLAIMS IN 2020 AND BEYOND

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By almost any measure, the #MeToo movement has had a remarkable impact on workplace harassment law.  As of today, five states have extended their statutes of li

The World Health Organization (WHO) has now declared the current outbreak of the new coronavirus first identified in Wuhan, Hubei Province, China as a “Public Health Emergency of International Concern.” As more countries announce quarantine measures for travelers returning from Wuhan, businesses need to ensure that they are prepared to deal with the impact of the coronavirus in the workplace. In this alert, we share our recommendations for employers and answer some of the questions that businesses are likely to be asking. Read our <a href="https://www.mofo.com/resources/insights/200131-coronavirus-employers.html?utm_source=publication&utm_medium=email">client alert</a>.

Managing Partner, London

Annabel Gillham

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

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Coronavirus: Steps Employers Should Be Taking

Coronavirus: Steps Employers Should Be Taking

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The World Health Organization (WHO) has now declared the current outbreak of the new coronavirus first identified in Wuhan, Hubei Province, China as a “Public H

As we leave the 2019 Holiday Season, employers may be questioning whether they adequately accommodated various religions practices among their employees. Accommodations for religious practices often arise during the holiday season in two major contexts: (1) time off for religious observances; and (2) religious expressions in the workplace. Unfortunately, there are no bright-line rules to guide employers. With this employment law commentary, we provide some general principles to help employers better understand their obligations to provide religious accommodations.The Right to Religious Accommodation Under Federal LawThe primary federal law requiring employers to accommodate their employees’ religious practices is Title VII of the Civil Rights Act of 1964 (“Title VII”), which applies to all employers in the U.S. with 15 or more employees. Under Title VII, employers cannot discriminate against employees and applicants based on their religious practices or beliefs.[1] Title VII is administered and enforced by the Equal Employment Opportunity Commission (EEOC). The EEOC has promulgated additional regulations further specifying an employer’s obligations to provide religious accommodations[2] and has also produced numerous other publications that further clarify both the act and the regulations.[3]For purposes of Title VII, religion includes “sincerely held” religious, moral, or ethical beliefs related to “ultimate ideas” about “life, purpose, and death,” including those that are not part of a well-known or organized religious tradition and those based on atheist or agnostic beliefs.[4] In addition to prohibiting discrimination, Title VII requires employers to provide reasonable accommodations to employees and applicants whose religious beliefs and practices require some variance from the employer’s policies and practices so long as those accommodation do not cause an “undue hardship” to the employer.[5] Common examples of accommodations include time off, schedule changes, transfers to new job positions, or exemptions from certain clothing or appearance policies. Generally, an accommodation causes an undue hardship if it would impose more than a de minimis cost upon the employer’s operations, including monetary costs and other effects on efficiency, safety, and other employees.[6] The standard for undue hardship applicable to religious accommodations under Title VII is lower than, and should not be confused with, the standard for reasonable accommodations for disabilities required by the Americans with Disabilities Act (ADA) and other state laws.Despite this relatively low standard, employers must make an effort to offer accommodations that are reasonable and not overly burdensome. Employers should not rely upon existing policies alone if an employee expresses concern that those policies do not accommodate their religious beliefs or practices. Employees do not always have to actually request an accommodation for their religious practices or beliefs. Once an employer becomes aware of a conflict between the employee’s religious beliefs and the employer’s work requirements, the employer generally should engage in an interactive process with the employee to determine whether an accommodation can be made.[7]If it believes that an employee’s requested accommodations would cause undue hardship, the employer should identify and offer alternatives to the employee that eliminate the conflict between the employer’s policies and the religious practice or belief. If none of these alternatives are found to suffice, the employer should only reject the employee’s proposals to the extent it can demonstrate that those requests will cause an undue hardship. Employers should document their efforts to identify accommodations and their reasons for rejecting any proposals made by their employees. It is important that the employer, when rejecting a requested accommodation, explain what costs the proposed accommodation would impose or how the accommodation would negatively impact the work environment, other employees, or customers, and the employer should inform the employee of these concerns so that both sides can consider possible alternatives.Time Off for Religious ObservanceOne of the most common accommodation requests for religious reasons is time off for religious observance. Many faiths require that their adherents regularly commit time to certain practices at particular times of day or on particular days of the week. Others may observe annual holidays that entail participation in customary or ceremonial practices that conflict with performing work on those days.Numerous courts have addressed the right to time off in observance of religious practices. Whether providing an employee with time off will cause an undue hardship on an employer varies substantially based on the frequency of the request, the size of the employer, the nature of the work, and the availability of other employees.[8] An employer’s obligations under a union contract may also be a factor in whether a requested accommodation will be unduly burdensome. For example, accommodating an employee’s request that requires giving preferential treatment that conflicts with the rights of other employees based on seniority may not be an accommodation an employer needs to provide.[9] On the other hand, labor organizations are also prohibited from discriminating on the basis of religion and have an obligation to provide reasonable religious accommodations.[10]Typically, employers may attempt to accommodate religious requests for time off through many their policies, such as existing paid time off or vacation policies, permitting employees to trade shifts with other employees, providing alternative shift schedules, or even offering alternative job positions. Generally, failure to accommodate claims are not successful when the employer can show that it has offered an employee a combination of options to comply with the employee’s religious needs that go beyond the employer’s existing policies. In cases where the employer offered only one means of accommodating an employee’s religious practice or has relied only on existing policies, however, the employees’ claims have tended to survive summary judgment.In one case, for example, an employer was able to show undue hardship at the summary judgment stage when an employee sought additional time off because the employer permitted the employee to take more half-day vacations than allowed by a collective bargaining agreement and actively worked to schedule the employee for shifts that would not conflict with the employee’s observation of the Sabbath in addition to vacation days, floating holidays, voluntary shift swaps with other employees, and unpaid leave time provided under existing policies.[11] By contrast, in another case, where the employer would not modify its existing vacation policy to accommodate the employee’s time off request for religious reasons, the court found that the employer could not show either that its offered accommodation was reasonable or that any further accommodation would cause an undue hardship at the summary judgment stage.[12]Religious Expression in the Work PlaceAnother common accommodation issue is the amount and form of religious expression that must be permitted in the workplace. Religious expression can come in many forms, including verbal expressions, office decorations, attire, and grooming. Whether a religious expression must be accommodated depends upon the content and context of that expression; simple religious greetings shared among welcoming employees are more likely to warrant accommodations than lengthy diatribes to unreceptive clients and customers. Although employers may be required to permit some forms of proselytization, religious salutations, or exceptions to their dress code,[13] if other employees or clients are disturbed or feel harassed by such conduct, the employer may be able to deny the request because it imposes an undue hardship.[14] For example, at least one court has held that employers need not grant exceptions to their anti-harassment policies for employees who use religious quotations to advocate anti-LGBTQ views.[15] Another court has also held that permitting employees to use religious salutations with some clients, such as “Have a Blessed Day,” but not with those clients who had expressed discomfort, was a reasonable accommodation.[16]With respect to grooming, employers generally have had to show that an employee’s non-conforming grooming practices pose some sort of safety-related risk, such as violation of a health or safety code. So, for example, employers have been able to show an undue hardship in multiple cases where an employee’s facial hair prevented that employee from being able to properly use face masks as required by applicable health and safety laws for him to perform his job.[17]A Brief Note Regarding State LawIn addition to the requirement to provide religious accommodation under federal law, several states have laws that require religious accommodations. Though many of these laws often follow accommodation standards similar to federal law, some states apply different standards. For example, the California Fair Employment and Housing Act (FEHA), as amended by the Workplace Religious Freedom Act of 2012,[18] applies to employers with five or more employees, rather than only those with 15 or more. Under FEHA, the test for undue hardship requires a showing of “significant difficulty or expense.”[19] California law specifically requires that an employer explore “any available reasonable alternative means of accommodating the religious belief or observance, including the possibilities of excusing the person from those duties that conflict with the person’s religious belief or observance or permitting those duties to be performed at another time or by another person.”[20] California law also specifically states that accommodations that require segregating employees are not reasonable.[21]Given the possible variation among religious accommodation tests, it is important to be mindful of the possible effect of state law when assessing accommodations.ConclusionGiven the complexities and nuances of accommodating religious beliefs and practices for employees and applicants, employers should consider developing well-defined procedures for handling such accommodations. These procedures can take many forms, but generally employers should keep the following points in mind when crafting such procedures:<ul><li>Train managers and human resource personnel on addressing religious accommodation practices of employees.</li><li>Whenever there is a possible conflict between an employee’s or applicant’s religious practices and the employer’s policies, employers should consider engaging in the interactive process to explore possible accommodations; </li><li>Assign designated personnel trained in religious accommodations to handle the interactive process to try to identify reasonable accommodations that will not cause an undue hardship to the employer and that are consistent with other accommodation requests; and</li><li>Create different standards and procedures for states, such as California, that have more stringent tests for religious accommodations.</li></ul>Even with robust accommodation procedures in place, some religious accommodation requests will still perplex employers. In those instances, consider consulting with counsel before rejecting the proposed religious accommodation. [1] 42 U.S.C. § 2000e et seq.[2] 29 CFR § 1605.2.[3] See “Questions and Answers: Religious Discrimination in the Workplace,” available online at <a href="https://www.eeoc.gov/policy/docs/qanda_religion.html">https://www.eeoc.gov/policy/docs/qanda_religion.html</a>; EEOC Compliance Manual, “Section 12: Religious Discrimination,” available online at <a href="https://www.eeoc.gov/policy/docs/religion.html">https://www.eeoc.gov/policy/docs/religion.html</a>.[4] 29 CFR § 1605.1.[5] 42 U.S.C. § 2000e(j).[6] Trans World Airlines, Inc. v. Hardison, 432 U.S. 63, 74 (1977).[7] See E.E.O.C. v. Abercrombie & Fitch Stores, Inc., 135 S. Ct. 2028 (2015).[8] Opuku-Boateng v. California, 95 F.3d 1461.[9] Virts v. Consolidated Freightways, 285 F. 3d 307.[10] 42 U.S.C. § 2000e-2(c).[11] See, e.g., E.E.O.C. v. Firestone Fibers & Textiles Co., 515 F.3d 307, 315 (4th Cir. 2008).[12] See Jacobs v. Scotland Mfg., Inc., No. 1:10CV814, 2012 WL 2366446 (M.D.N.C. June 21, 2012).[13] See, e.g., Banks v. Serv. Am. Corp., 952 F. Supp. 703 (D. Kan. 1996); Rivera v. Choice Courier Sys., Inc., 2004 WL 1444852 (S.D.N.Y. June 25, 2004).[14] See, e.g., Wilson v. U.S. West Communications, 58 F.3d 1337 (8th Cir.1995) (holding that requirement that employee cover up graphic images was a reasonable accommodation).[15] Peterson v. Hewlett-Packard Co., 358 F.3d 599, 604 (9th Cir. 2004).[16] Anderson v. U.S.F. Logistics (IMC), Inc., 274 F.3d 470, 476 (7th Cir. 2001).[17] See, e.g., Bhatia v. Chevron U.S.A., Inc., 734 F.2d 1382, 1384 (9th Cir. 1984); EEOC v. Sambo’s of Georgia, Inc., 530 F. Supp. 86.[18] Cal. Gov’t Code § 12940.[19] Cal. Gov’t Code §§ 12926(u).[20] Cal. Gov’t Code § 12940(1)(1).[21] Cal. Gov’t Code § 12940(l)(2).

Faithful Accommodations: What Employers Should Do When Addressing Religious Accommodations in the Workplace

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Faithful Accommodations: What Employers Should Do When Addressing Religious Accommodations in the Workplace

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As we leave the 2019 Holiday Season, employers may be questioning whether they adequately accommodated various religions practices among their employees. Accomm

A California federal court has given employers a New Year’s gift, issuing a temporary restraining order preventing Assembly Bill 51—the law barring employers from requiring employees to enter into agreements to arbitrate FEHA and California Labor Code claims—from going into effect. The order will remain in place until the court rules on the pending motion for a preliminary injunction, which is set to be heard on January 10, 2020.Background on AB 51On October 10, 2019, Governor Gavin Newsom signed into law Assembly Bill 51 (AB 51). When (or if) it takes effect, AB 51 will prohibit employers from entering into new agreements—or extending previous ones—that require employees or applicants to arbitrate claims arising under the California Labor Code or the California Fair Employment and Housing Act (FEHA). Specifically, AB 51 will amend the Labor Code to provide, “A person shall not, as a condition of employment, continued employment, or the receipt of any employment-related benefit, require any applicant for employment or any employee to waive any right, forum, or procedure for a violation of any provision of the” FEHA or Labor Code.[1] These rights, forums, and procedures include “the right to file and pursue a civil action or a complaint with, or otherwise notify, any state agency, other public prosecutor, law enforcement agency, or any court or other governmental entity of any alleged violation.”[2]AB 51 also bars opt-out provisions, a common way to provide a choice of whether to enter into an arbitration agreement, stating that any “agreement that requires an employee to opt out of a waiver or take any affirmative action in order to preserve their rights” is deemed to impose “a condition of employment.”[3] Noncompliance with AB 51 is itself an unlawful labor practice and can be punishable as a crime.[4]AB 51 includes a few exceptions. As discussed further below, it is not “intended to invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act.”[5] In addition, it applies only prospectively to agreements “entered into, modified, or extended” after the law’s effective date (January 1, 2020).[6]Governor Brown Twice Vetoed Similar Legislation Because It Is Preempted by the FAAAB 51 is at least the third attempt by the California legislature to bar arbitration agreements in the employment context. Former Governor Jerry Brown twice vetoed similar bills. In 2015, Governor Brown vetoed AB 465, <a href="https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=201520160AB465">reasoning in part</a> that “a blanket ban on mandatory arbitration agreements is a far-reaching approach that has been consistently struck down in other states as violating the Federal Arbitration Act.”Three years later, the legislature passed a substantially similar bill, AB 3080, which Governor Brown again <a href="https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=201720180AB3080">vetoed because</a> it “plainly violate[d] federal law.” He explained that “[t]he direction from the Supreme Court since my earlier veto has been clear – states must follow the Federal Arbitration Act and the Supreme Court’s interpretation of the Act.” “By its terms, . . . the Act cares not only about the ‘enforce[ment]’ of arbitration agreements, but also about their initial ‘valid[ity]’—that is, about what it takes to enter into them. Or said otherwise: A rule selectively finding arbitration contracts invalid because improperly formed fares no better under the Act than a rule selectively refusing to enforce those agreements once properly made.”Pending Legal Challenge to AB 51As widely anticipated, the U.S. Chamber of Commerce, the California Chamber of Commerce, the National Retail Federation, and other organizations filed a Complaint for Declaratory and Injunctive Relief in federal court challenging the statute.[7] Preemption is the gravamen of the complaint: “AB 51’s limits on arbitration agreements conflict with federal law. Those limits are therefore preempted and invalid under the Supremacy Clause of the Constitution of the United States.”[8] Plaintiffs rely on the legislative analysis and the provisions of AB 51 itself in alleging that AB 51 “is specifically targeted to preclude the use of arbitration agreements as a condition of employment” in violation of the FAA.[9] Plaintiffs further allege that the attempted carve out for agreements otherwise enforceable under the FAA does not avoid this result because the U.S. Supreme Court has confirmed that the FAA bars state laws that create a barrier to entering into arbitration agreements.[10]Plaintiffs ask that the court: a) declare AB 51 preempted by the FAA; and b) preliminarily and permanently enjoin the California AG and other state officials from enforcing AB 51 for arbitration agreements governed by the FAA.The Motion for a Temporary Restraining OrderOn December 16, 2019, the plaintiffs moved for a temporary restraining order (TRO) to delay enforcement of the new law while the parties litigate plaintiffs’ motion for preliminary injunction.[11] In support of their request, plaintiffs argued that:(1) they are likely to succeed on the merits: “[t]he preemption question is not a close call” because “the Supreme Court has repeatedly held that state laws disfavoring arbitration agreements are preempted”;(2) businesses face irreparable harm if the law goes into effect, either because they will have to forego their federal protected rights to enter into arbitration agreements with employees if they comply with AB51 or because they face potential enforcement actions if they do not comply; and(3) the balance of hardships and public interest “strongly support” issuance of the requested TRO.[12]The defendants countered that “AB 51 does not run afoul of . . . the FAA.”[13] Because AB 51 applies to all forms of alternative dispute resolution, the defendants contend, it does not discriminate against arbitration. They further argue that AB 51 will prohibit only unilateral, employer-imposed arbitration provisions; it “does not prevent parties from entering into arbitration agreements voluntarily.”[14] According to defendants, AB 51 is consistent with the FAA principle that arbitration “is a matter of consent, not coercion.”[15]Absent preemption, defendants argue, there is no irreparable harm, and plaintiffs cannot show that the balance of hardships weights in their favor.On December 30, 2019, Judge Kimberly J. Mueller issued an order granting the TRO, enjoining the state from enforcing AB 51 pending resolution of the pending motion for preliminary injunction.[16] The court found that plaintiffs “raised serious questions regarding whether the challenged statute is preempted” by the FAA and agreed with plaintiffs that there was a risk of irreparable harm if AB 51 were to go into effect even briefly, because employment agreements would be disrupted if AB 51 is eventually deemed preempted, “particularly given the criminal penalties to which violators of the law may be exposed.”[17] The court will hear the motion for preliminary injunction on January 10, 2020.We will continue to monitor the lawsuit and will report on further developments.[1] Cal. Lab. Code § 432.6(a) (2020).[2] Id.[3] Id. § 432.6(c).[4] Id. § 433; Cal. Gov’t Code § 12953.[5] Cal. Lab. Code § 432.6(f).[6] Id. § 432.6(h).[7] Complaint, Chamber of Commerce of the United States v. Becerra, No. 2:19-cv-02456-KJM-DB (E.D. Cal. Dec. 9, 2019), ECF No. 1.[8] Id. ¶ 15.[9] Id. ¶ 43.[10] Id. ¶¶ 61–63.[11] Motion for a Temporary Restraining Order, filed Dec. 16, 2019, ECF No. 8.[12] Memorandum of Law in Support of Plaintiffs’ Motion for a Temporary Restraining Order, filed Dec. 16, 2019, ECF No. 8-1 at 4–5, 8.[13] Defendants’ Opposition to Motion for Temporary Restraining Order, filed Dec. 20, 2019, ECF No. 14 at 7.[14] Id. at 6 (emphasis omitted).[15] Id. at 1 (quoting Stolt-Nielson S.A. v. AnimalFeeds Int’l Corp. 559 U.S. 662, 681 (2010)).[16] Order Granting Temporary Restraining Order and Setting Expedited Hearing on Preliminary Injunction, filed December 30, 2019, ECF No. 24.[17] Id. at 2.

Temporary Reprieve for Employers During Challenge to AB 51, New California Law Barring Mandatory Employment Arbitration Agreements

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Temporary Reprieve for Employers During Challenge to AB 51, New California Law Barring Mandatory Employment Arbitration Agreements

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A California federal court has given employers a New Year’s gift, issuing a temporary restraining order preventing Assembly Bill 51—the law barring employers fr

California employers will be impacted by several new laws signed by Governor Newsom during this past legislative session. Employers should review their policies and procedures in light of these developments, most of which will be effective January 1, 2020. Minimum wages will also increase for California employers to $13.00 per hour for employers with 26 or more employees and $12.00 per hour for employers with 25 or fewer employees. A. AB 5 Codifies the “ABC Test” Set Forth in the Dynamex Decision AB 5 codifies the 2018 decision of the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles. Prior to Dynamex, California courts analyzed independent contractor misclassification under the test set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations. Under the Borello test, whether an individual is properly classified as an independent contractor turns on various factors that focus primarily on whether the entity engaging the individual exercised control over the manner and means by which the work was performed.In Dynamex, the California Supreme Court announced a new “ABC Test” for determining whether workers were properly classified as independent contractors in claims under California wage orders. Under the test, employers must prove that workers meet all three of the following factors to classify workers as independent contractors:1. The worker was free from the control and direction of the hiring entities’ business in connection with the performance of the work, both under the contract for the performance of such work and in fact;2. The worker performed work that was outside the usual course of the hiring entity’s business; and3. The worker was customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.AB 5 codifies the “ABC Test” and makes that test applicable to claims under California wage orders, unemployment insurance, and workers compensation. Given incorporation of the ABC Test into the California Labor Code, employers may now be subject to the Private Attorney General Act of 2004 (PAGA) representative actions brought by independent contractors claiming to be misclassified under the new law. Notably, workers in several industries, such as investment advisors, lawyers, and certain professional service providers are exempt from the reach of AB 5. Instead, those industries will remain subject to the Borello factors and other criteria included in the statute.  Claims under the California wage orders and unemployment insurance will be subject to AB 5 starting on January 1, 2020. Workers’ compensation claims will be covered by the new law starting on July 1, 2020. Businesses engaging independent contractors in California should review those relationships in light of this new law.B. SB 688 Expands the Labor Commissioner’s Authority on Unpaid WagesSB 688 expands the California Labor Commissioner’s authority to issue citations to an employer to recover restitution for failing to pay wages set by contract in excess of the minimum wage. Previously, the California Labor Commissioner could only cite employers for failing to pay at least the minimum wage set by law. As a result, employers should notify employees of any change in their compensation. C. AB 673 Permits Employees to Bring Actions for Statutory Penalties for Late Payment of WagesAB 673 provides employees with a private right of action to recover civil penalties for unpaid wages that were previously recoverable only by the California Labor Commissioner. Employees, however, are not permitted to recover civil penalties under both AB 673 and under PAGA for the same violation. Instead, employees can recover only under one of the statutes for a particular violation. Penalties under AB 673 include initial fines of $100 for each failure to pay each employee and fines of $200 and 25% of the amount unlawfully withheld for each subsequent violation or any willful or intentional violation.D. AB 51 Bans Employers From Requiring Arbitration of Employment Disputes as a Condition of EmploymentAB 51 seeks to ban employers from requiring applicants or employees to enter into mandatory arbitration agreements for employment claims under the California Fair Employment and Housing Act (FEHA) and the California Labor Code. Employers will no longer be able to require applicants or employees as a condition of employment, continued employment, or the receipt of any employment-related benefit to agree to waive any right, forum, or procedure, including the right to file or pursue a claim in court, for a violation of FEHA or other specific California statutes governing employment claims. An agreement requiring employees to opt out of a waiver or take any other action to preserve their rights is still deemed “a condition of employment.” Employers can face claims if they threaten, retaliate or discriminate against, or terminate “any applicant for employment or any employee because of the refusal to consent to the waiver of any right, forum, or procedure for a violation” of FEHA or the California Labor Code. In addition to other available remedies, plaintiffs who enforce their rights under AB51 can obtain injunctive relief and reasonable attorneys’ fees. A violation of AB 51 will also constitute a misdemeanor under Labor Code section 433.The law will not apply retroactively to existing arbitration agreements. Instead, it is limited to agreements entered into, modified, or extended on or after January 1, 2020. Post-dispute settlement agreements or negotiated severance agreements are also exempted from this new law. So AB 51 will not prohibit employers from having settlement or severance agreements with employees that require arbitration of employment claims. While AB 51 expressly states that it does not invalidate any agreement governed by the Federal Arbitration Act, a business coalition led by the U.S. Chamber of Commerce and the National Retail Federation filed a declaratory judgment action on December 6, 2019 seeking to invalidate the law on preemption grounds, arguing that the law penalizes employers by exposing them to criminal liability. Employers with mandatory arbitration programs will need to consider whether to suspend those programs in 2020 and wait until the current lawsuit is resolved or scale back their arbitration programs to exclude FEHA and Labor Code claims.E. SB 707 Treats an Employer’s Failure to Timely Pay Arbitration Fees as a Waiver of the Right to Compel ArbitrationSB 707 requires employers who draft arbitration agreements to pay the costs and fees associated with arbitration of employment claims. An employer’s failure to pay those costs and fees within 30 days of the due date constitutes a “material breach” and “waives its right to compel arbitration.” In addition, an employee can withdraw the claim from arbitration and file his or her claim in court. F. AB 749 Prohibits No-Rehire Provisions in Settlement AgreementsAB 749 provides that settlement agreements with employees entered into on or after January 1, 2020 can no longer prohibit the employee from working for the employer in the future. The law includes some notable exceptions, including where the employer has made a good faith determination that the individual engaged in sexual harassment or assault or “if there is a legitimate non-discriminatory or non-retaliatory reason for terminating the employment relationship or refusing to rehire the person.”G. AB 9 Extends the Statute of Limitations for FEHA ClaimsAB 9 extends the time an employee has to file an administrative complaint with the California Department of Fair Employment and Housing (DFEH) from one year to three years. Under current law, an employee seeking to bring an action against his or her employer for harassment, discrimination, or retaliation in violation of FEHA has one year to file a complaint with the DFEH. Although this law significantly extends the time limit for employees to file their administrative complaints, it will not revive claims that have lapsed under the current law. Employers should keep in mind that employees will continue to have one additional year to file a civil action in court after receipt of a right-to-sue letter from the DFEH. H. SB 188 Clarifies Race Discrimination Protections Include HairstylesSB 188, also known as the CROWN Act,<a href="file:///C:/Users/axr34/AppData/Roaming/OpenText/DM/Temp/SAN_FRANCISCO-#4145454-v10-Nov_ELC_2020_Legislative_Recap_DRAFT.docx#_ftn1">[1]</a> clarifies that the definition of “race” under FEHA is inclusive of traits historically associated with race, including, but not limited to, hair texture and “protective hairstyles,” which include hairstyles such as braids, locks, and twists. Employers should review their workplace dress code and grooming policies in light of this new law. I. SB 778 Establishes Harassment Training RequirementsSB 778 provides that employers with five or more employees (including temporary and seasonal workers) will now have additional time to comply with the statutory requirements under SB 1343 regarding bi-annual sexual harassment prevention training. Under SB 1343, the initial compliance deadline was January 1, 2020. SB 778 gives covered employers until January 1, 2021 to provide two hours of sexual harassment prevention training to supervisors and one hour of sexual harassment prevention training to other employees. Note that under current law, employers with 50 or more employees are already required to provide supervisors with two hours of sexual harassment prevention training. The new law does not extend the compliance deadlines for those obligations. However, the law clarifies that supervisors who were provided training in 2018 do not need to be trained again until 2020. J. SB 142 Expands Employer Lactation Accommodation RequirementsEmployers with 50 or more employees will have new obligations under SB 142 for providing lactation accommodations to employees. Employers were previously required to make reasonable efforts to provide employees with the use of a lactation room or other location (other than a bathroom) close to the employees’ work area to express breast milk in private. Under the new law, employers are required to provide a lactation room or other location for expressing breast milk that complies with the following requirements:1. Is safe, clean, and free of hazardous materials, as defined in Section 6382;2. Has a surface to place a breast pump and personal items;3. Has a place to sit; and4. Provides access to electricity or alternative devices, including, but not limited to, extension cords or charging stations, needed to operate an electric or battery-powered breast pump.Employers are also required to provide access to a sink with running water and a refrigerator suitable for storing milk close to the employees’ workspace. If a refrigerator cannot be provided, employers are permitted to provide another cooling device suitable for storing milk. Employers with fewer than 50 employees may be granted an exemption if they are able to show that they would suffer an undue hardship.  The new law also provides for additional penalties in the event of violations. For example, employers could be subject to a civil penalty of up to $100 per day for each day an employee is denied adequate space to express milk. Previously, the law permitted a $100 penalty per violation. <a href="file:///C:/Users/axr34/AppData/Roaming/OpenText/DM/Temp/SAN_FRANCISCO-#4145454-v10-Nov_ELC_2020_Legislative_Recap_DRAFT.docx#_ftnref1">[1]</a> The Create a Respectful and Open Workplace for Natural Hair Act.

California Issues A New Round Of Employment Laws

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California Issues A New Round Of Employment Laws

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California employers will be impacted by several new laws signed by Governor Newsom during this past legislative session. Employers should review their policies

On November 26, 2019 the Official Journal of the European Union published the European Whistleblowing Directive (“the Directive”). This means that EU member states must now implement the Directive into national law, and companies employing 250 or more workers must be in compliance with the Directive by December 17, 2021. However, companies in the private sector with 50 to 249 workers will have until December 17, 2023 to comply with the Directive and establish internal reporting channels as required under Article 8(3).It is worth noting that the Directive does not specify whether the appropriate thresholds apply only to workers physically located in the EU. That said, in our view, a reasonable interpretation of the Directive would lead to the conclusion that any legal entity based or headquartered in the EU that employs 50 or more workers globally, regardless of the physical locations of those workers, would need to comply with the Directive. In the case of legal entities that are not based or headquartered in the EU, our view is that such entities that employ 50 or more workers located in the EU would fall under the scope of the Directive. This is because almost all EU statutory instruments related to worker protection apply to workers located in the EU and disregard the location of their employer’s head office. In other words, a company with its head office in Brazil employing 50 workers in France would likely be covered by the Directive’s scope. We hope that EU Member States will provide additional clarity on this point once they implement the Directive within their domestic legislation. To find out more about the Directive and what it means for your organization, please visit the original article <a href="https://elc.mofo.com/topics/european-whistleblowing-directive-what-you-should-know.html">here</a>.Morrison & Foerster trainee solicitor Tom Macintosh Zheng contributed to the writing of this post.

Update: The European Whistleblowing Directive: What You Should Know

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

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For more than two decades, Hanno has advised and represented leading domestic and international corporations in a wide variety of industries, including technology, consumer products, automotive, and 

Hanno Timner

Hanno Timner is a partner in the Berlin office and head of the Employment and Labor practice group in Germany. He advises and represents national and international employers in all labor law issues and disputes.

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Senior Associate

Christin is a senior associate at Morrison & Foerster’s German office in Berlin and is a member of the Employment & Labor practice group. She advises national and international companies on all issues

Christin Dunkel

Christin is a senior associate at Morrison & Foerster’s German office in Berlin and is a member of the Employment & Labor practice group. She advises national and international companies on all issues and disputes arising under labor law.

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Update: The European Whistleblowing Directive: What You Should Know

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On November 26, 2019 the Official Journal of the European Union published the European Whistleblowing Directive (“the Directive”). This means that EU member sta

<p style="background-color: transparent;box-sizing: border-box;color: rgb(82, 83, 87);font-size: 16.93px;font-style: normal;font-variant-ligatures: normal;font-variant-caps: normal;font-variant-numeric: normal;font-variant-east-asian: normal;font-weight: 400;letter-spacing: normal;line-height: 27.08px;margin-bottom: 20px;margin-left: 0px;margin-right: 0px;margin-top: 0px;orphans: 2;text-align: left;text-decoration-line: none;text-decoration-thickness: initial;text-decoration-style: initial;text-decoration-color: initial;text-indent: 0px;text-transform: none;webkit-text-stroke-width: 0px;white-space: normal;word-spacing: 0px;overflow-wrap: normal;padding-top: 0px;padding-right: 0px;padding-bottom: 0px;padding-left: 0px;">Andrew Turnbull, Employment + Labor Of Counsel, and Victoria Dalcourt Angle, Government Contracts Associate, co-wrote a blog post detailing the Trump Administration's decision to revoke <a href="https://www.govinfo.gov/content/pkg/DCPD-200900039/pdf/DCPD-200900039.pdf" target="_blank">Executive Order 13495, Nondisplacement of Qualified Workers Under Service Contracts</a> (“EO 13495”), removing the requirement for federal service contractors to offer employment to employees of predecessor contractors.<p style="background-color: transparent;box-sizing: border-box;color: rgb(82, 83, 87);font-size: 16.93px;font-style: normal;font-variant-ligatures: normal;font-variant-caps: normal;font-variant-numeric: normal;font-variant-east-asian: normal;font-weight: 400;letter-spacing: normal;line-height: 27.08px;margin-bottom: 20px;margin-left: 0px;margin-right: 0px;margin-top: 0px;orphans: 2;text-align: left;text-decoration-line: none;text-decoration-thickness: initial;text-decoration-style: initial;text-decoration-color: initial;text-indent: 0px;text-transform: none;webkit-text-stroke-width: 0px;white-space: normal;word-spacing: 0px;overflow-wrap: normal;padding-top: 0px;padding-right: 0px;padding-bottom: 0px;padding-left: 0px;">Read more on the <a href="https://govcon.mofo.com/labor-employment/in-a-long-anticipated-move-the-trump-administration-revokes-executive-order-13495-giving-service-contractors-more-flexibility-when-hiring-predecessor-contractor-employees/">Government Contracts Insights</a> blog.

In a Long-Anticipated Move, the Trump Administration Revokes Executive Order 13495, Giving Service Contractors More Flexibility when Hiring Predecessor Contractor Employees

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In a Long-Anticipated Move, the Trump Administration Revokes Executive Order 13495, Giving Service Contractors More Flexibility when Hiring Predecessor Contractor Employees

In a Long-Anticipated Move, the Trump Administration Revokes Executive Order 13495, Giving Service Contractors More Flexibility when Hiring Predecessor Contractor Employees 

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Andrew Turnbull, Employment + Labor Of Counsel, and Victoria Dalcourt Angle, Government Contracts Associate, co-wrote a blog post detailing the Trump Administra

Until now, there has been no baseline regime for the protection of whistleblowers in the European Union (“EU”). Member state legislation in this area is largely fragmented and, in many cases, does not provide much (if any) protection for whistleblowers. Presently, only 10 out of the 28 member states have comprehensive legislation protecting whistleblowers, while the remaining 18 member states only offer limited protection within specific sectors.[1] The notion of introducing a uniform regime has been on the cards for some years, but in the wake of recent scandals such as the Panama Papers, Luxleaks, and Cambridge Analytica, all of which were brought to the world’s attention by whistleblowers, this has moved to the top of the agenda. The European Parliament and the European Council have now formally adopted and ratified the Whistleblowing Directive (“the Directive”) with effect from October 7, 2019.In this Commentary, we provide an overview of the Directive, briefly compare the Directive to the current legal position in Germany and the UK, and explain how its implementation will impact organizations with employees in the European Union.What Is a “Directive”?A directive is a legal instrument approved by the EU legislature, which, in general, requires implementation into local law by individual EU member states before it becomes effective. Directives often carry an overarching objective and allow member states to select the means by which they achieve the objective. This means that the local laws implementing a directive will differ between member states.The Directive: General OverviewAs noted, the Directive lays the foundation for EU-wide protection of whistleblowers at work and sets EU-wide standards for both public and private companies to (i) respond to concerns raised by whistleblowers and (ii) ensure adequate protection against retaliation. The Directive is likely to be published in the EU’s Official Journal in November 2019, meaning that EU member states will have to implement local laws giving effect to the Directive by no later than November 2021. If a member state fails to implement the Directive by the imposed deadline, then the European Commission may ask the court to impose fines on the infringing member state.Who will be protected under the Directive? The Directive protects whistleblowers working in the private or public sector who acquired information on breaches of EU law in a work-related context (“Whistleblowers”). The term “work-related” is, however, broadly defined and refers to current and former employees, as well as to shareholders, interns, job applicants, paid or unpaid trainees, and employees of contractors and subcontractors.In order to be protected under the Directive, the individual must simply have reasonable grounds to believe that the information reported is accurate. Other concerns, such as the individual’s motive or the public interest, are irrelevant in deciding whether the individual receives protection under the Directive.What types of breaches can Whistleblowers report?The Directive’s scope of application is currently limited to reports relating to breaches and abuse of EU law. However, member states can broaden this scope, and, in any event, for member states that do not currently have sufficient whistleblower protection laws (e.g., Germany), the Directive will still enhance the level of protection afforded to Whistleblowers.How do Whistleblowers make a report under the Directive?The Directive stipulates three possible stages for reporting to a breach:<ul><li>Stage 1 – Internal Reporting: The Directive encourages member states to require individuals to raise concerns to their employers internally, before using other channels of reporting. The Directive also requires that the employer must acknowledge receipt of the complaint within seven days, and must then respond substantively to the complaint within three months of receipt.</li></ul><ul><li>Stage 2 – Reporting to National or EU Authorities: While Whistleblowers should be encouraged to follow internal reporting procedures in the first instance, Whistleblowers may bypass Stage 1 and report directly to national or EU authorities. For example, if (in breach of the Directive) an employer does not have an internal reporting mechanism or if the Whistleblower believes that internal reporting may endanger or jeopardize future investigations, then the employee has the right to report any issues directly to a “competent authority,” either nationally or at EU level. (It is not clear under the Directive what would amount to a “competent authority.”)[2]</li></ul><ul><li>Stage 3 – Public Disclosure: If both Stage 1 and Stage 2 do not “function properly,” [3] or if the Whistleblower has reasonable grounds to believe that there is an “imminent danger to the public interest,” then the employee has the right to disclose the issue directly to the public via any media channels. </li></ul>Organizations must provide a mechanism for Whistleblowers to be able to raise concerns. This could be through either a written or oral report, and organizations must allow Whistleblowers an opportunity for an in-person meeting with a “responsible person” within the organization to discuss their concerns. Organizations are also required to designate a person or a department responsible for following up on reports and establishing procedures and guidelines on the follow-up process and must publicize these procedures to the workforce.How will Whistleblowers be protected under the Directive?The Directive increases the burden on employers and strengthens the protections afforded to Whistleblowers. It does so by:(a) requiring organizations with 50 or more workers to introduce internal channels and procedures for whistleblowing (see “How do Whistleblowers make a report under the Directive?”);(b) expanding the scope of individuals protected by whistleblowing laws (see “Who will be protected under the Directive?”); (c) protecting Whistleblowers from civil liability (for example, claims for breach of confidence or defamation), provided the Whistleblower can demonstrate that they have “reasonable grounds” for their actions;(d) introducing legal aid for Whistleblowers in certain circumstances;(e) banning all forms of retaliation in the workplace against a Whistleblower, which would include suspension, dismissal, demotion, harassment, and/or discrimination; and(f) requiring member states to ensure that Whistleblowers have access to free advice in the event that they suffer retaliation.However, it is worth noting that, unlike the position in the United States, the Directive does not provide for the offer of financial incentives for Whistleblowers.What are the consequences of failing to comply with the requirements set out in the Directive?The Directive requires member states to establish “effective, proportionate and dissuasive penalties”[4] against any organizations that attempt to hinder reporting or to take retaliatory measures against Whistleblowers. Aside from these financial penalties, failing to implement the correct procedures or taking retaliation against a Whistleblower will likely have a negative impact on the organization’s reputation.The Directive and Existing German LawIn Germany, no comprehensive legal framework on the protection of Whistleblowers, reporting mechanisms, and protection against retaliation currently exist. While limited whistleblower protection exists for workers within the financial services industry and for employees raising health and safety concerns at work, the Directive will mark a significant change to current domestic law – and the protection of whistleblowers – in Germany.The Directive and Existing UK LawUnlike in Germany, the UK has, through the Public Interest Disclosure Act 1998, implemented wide-ranging protections for Whistleblowers in the workplace, many of which mirror the requirements of the Directive. Currently, dismissing an employee for making a “protected disclosure” amounts to automatic unfair dismissal, and workers are protected from suffering a “detriment” as a result of making a protected disclosure. Additionally, employers found to have subjected a Whistleblower to a detriment face potentially uncapped damages.Nonetheless, the Directive will (if implemented in the UK), enhance protections currently afforded to Whistleblowers, particularly in relation to the requirement to establish internal channels and procedures for whistleblowing and the introduction of legal aid in certain circumstances. (See “How will Whistleblowers be protected under the Directive?”)Will the UK Incorporate the Directive into Domestic Law?Given the general uncertainty surrounding Brexit at the time of writing, it is unclear whether the UK will incorporate the Directive into domestic law. The government has not yet confirmed that it plans to bring the Directive into domestic law if a “no deal” Brexit occurs. That said, prominent charities aimed at promoting and protecting Whistleblowers in the UK, such as “Protect,” have lobbied the government to adopt the Directive irrespective of the type of Brexit that may occur, so it is possible that something akin to the Directive might be introduced into UK legislation after Brexit. In the words of Protect, if the UK leaves the EU, the Directive “may prove to be the first test as to whether the UK keeps up with the EU’s levels of protection, or allows its workers to fall behind.”[5] Conclusion – What to do now?During the next two years, member states will start implementing the Directive into national law, and companies employing 250 or more workers should be in compliance with these laws by November 2021. However, medium-sized companies, which employ more than 50 but less than 250 workers, should comply by November 2023. Nevertheless, all companies should monitor the lawmakers in those member states where they have offices and employees and should slowly begin their implementation of the requirements under the Directive. If a whistleblowing system already exists, companies should review, adjust, and update these procedures accordingly. If not, they must implement reporting channels and procedures that fulfill the requirements under the Directive.Morrison & Foerster trainee solicitor Tom Macintosh Zheng has contributed to the writing of this post. [1] Strengthening whistleblower protection at EU level: European Economic and Social Committee<a href="https://www.eesc.europa.eu/en/our-work/opinions-information-reports/opinions/strengthening-whistleblower-protection-eu-level">https://www.eesc.europa.eu/en/our-work/opinions-information-reports/opinions/strengthening-whistleblower-protection-eu-level</a>[2] Article 11(1) Directive on the protection of persons who report breaches of Union law[3] (62) Directive on the protection of persons who report breaches of Union law[4] Article 23(1) Directive on the protection of persons who report breaches of Union law[5] EU Directive on Whistleblowing: Protect - <a href="https://protect-advice.org.uk/eu-directive-on-whistleblowing/">https://protect-advice.org.uk/eu-directive-on-whistleblowing/</a>

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The European Whistleblowing Directive: What You Should Know

The European Whistleblowing Directive: What You Should Know

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Until now, there has been no baseline regime for the protection of whistleblowers in the European Union (“EU”). Member state legislation in this area is largely

For decades, many employers have categorically prohibited marijuana use given its illegal status under federal law. With a growing number of state and localities legalizing marijuana and creating protections for marijuana users, many employers have been left wondering whether they can continue to lawfully fire or refuse to hire employees and applicants who use marijuana. This Commentary discusses the seeming conflict between federal and state law regarding marijuana and the increasingly shaky grounds for federal preemption in the employment context.Federal Stance on MarijuanaUnder federal law, use and possession of marijuana is illegal, even for medical purposes. In 1970, the Federal Controlled Substances Act (CSA) established five schedules of controlled substances, ranging from schedule I (most potential for abuse) to schedule V (least potential for abuse).[1] The CSA has always categorized marijuana as a schedule I drug—i.e., as a drug with “no currently accepted medical use in the United States,” “no currently accepted medical use in treatment in the United States,” and “a high potential for abuse.”[2] Heroin, ecstasy, and peyote are three examples of other drugs listed on schedule I.[3]In addition to the CSA, certain federal contractors and recipients of federal grants are subject to the Drug-Free Workplace Act of 1988 (DFWA). The DFWA requires covered companies to prohibit employees from engaging in the “unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance” in the workplace, including any location where the work is done “in connection” with a covered contract or grant.[4] The DFWA requires contractors to take direct action against employees who violate the DFWA, which can include terminating their employment or requiring satisfactory participation in a drug-abuse assistance or rehabilitation program. Contractors who fail to comply with the DFWA can face harsh penalties, such as cancellation of their federal contracts or grants.Using or possessing marijuana may also jeopardize an individual’s ability to obtain a security clearance, which is necessary for some employees to access classified information.[5]Workplace Drug TestingMany employers have drug testing programs that screen for marijuana. Testing might include pre-employment testing, testing employees based upon reasonable suspicion of drug use, and, where permitted, random drug testing. Companies have good reason to test for drugs, including ensuring a safe and productive workplace, reducing possible claims of negligent hiring, and even obtaining discounts on workers’ compensation premiums in certain states.If testing complies with applicable law, employers have typically been able to lawfully decline to hire applicants or terminate employees who test positive for marijuana. The Americans with Disabilities Act (ADA) does not add any protection for marijuana users. Although the ADA protects employees from being disciplined or terminated for taking legally prescribed drugs in accordance with their prescriptions, the ADA does not protect individuals who use schedule I drugs under the CSA, which means it does not protect medical marijuana users.Unlike alcohol tests, current marijuana tests are not sophisticated enough to determine whether someone is under the influence at the time of test. Instead, marijuana tests typically show whether someone has used marijuana during the weeks leading up to the test. Given the difficulty of determining whether a positive test is the result of marijuana usage during work or during non-work hours, some employers have found it easier to ban marijuana use outright.A Growing Chorus of States Legalize Marijuana for Medical and Recreational UseOver the last decade, a growing number of states have legalized marijuana use. Thirty-three states and the District of Columbia have approved comprehensive medical marijuana legislation, and thirteen states have legalized the use of “low THC, high cannabidiol (CBD)” products for medical reasons in limited situations or as a legal defense.[6] Recreational use of marijuana has also been legalized by eleven states (Alaska, California, Colorado, Illinois, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, and Washington) and the District of Columbia.[7]While the majority of these state laws do not address whether an employer can take adverse action against employees for marijuana use, fourteen states so far have gone a step further by limiting an employer’s ability to discipline or terminate employees for off-duty medical marijuana use.[8] For example, New Jersey law prohibits employers from taking adverse employment action against an employee or applicant “based solely on the employee’s status” as a registered medical marijuana patient.[9] The law also requires employers to give employees or applicants an opportunity to provide a “legitimate medical explanation” if they test positive for marijuana before taking any adverse action.[10] Other states, such as Illinois,[11] Maine,[12] and Nevada,[13] impose even stricter limitations by prohibiting employers from rescinding job offers or taking adverse action for off-duty marijuana use—even recreational use.New York City and Nevada also recently passed legislation barring employers from testing applicants for jobs in those jurisdictions for marijuana. Both laws are subject to certain exceptions. For example, the New York City law, which will go into effect on May 10, 2020, exempts certain jobs that have the potential to impact the health or safety of employees or the public, such as commercial drivers and medical staff, or if such testing is required by federal contracts, grants, or other laws. Whether other jurisdictions will follow suit remains to be seen.Reconciling Federal and State Laws on MarijuanaAlthough the CSA does not expressly preempt state law “unless there is a positive conflict” with the state law,[14] some courts have found that the CSA preempts state laws permitting medical marijuana use.[15] For example, in Emerald Steel Fabricators, Inc. v. Bureau of Labor & Indus.,[16] an employee who used medical marijuana to manage pain from his sinus cancer and inoperable brain tumor claimed that his employer violated the Oregon Medical Marijuana Act (OMMA) by terminating him for testing positive for marijuana. The employer argued that the OMMA was preempted by the CSA. The Supreme Court of Oregon agreed, finding that the employer did not discriminate against the employee because he was engaged in the illegal use of drugs under federal law.A handful of more recent cases, however, have gone the other way. In Noffsinger v. SSC Niantic Operating Co., LLC,[17] the employer argued that the federal law preempted an employee’s claim that it violated Connecticut’s Palliative Use of Marijuana Act (PUMA) by terminating him for testing positive for marijuana, despite him allegedly using marijuana to treat post-traumatic stress disorder. Distinguishing Emerald Steel, the court held that PUMA, unlike OMMA, explicitly barred employment discrimination for marijuana use by providing that no “employer may refuse to hire a person or may discharge, penalize or threaten an employee solely on the basis of such person’s or employee’s status as a qualifying patient” under the law.[18] A federal court in Arizona reached a similar conclusion when it found that a plaintiff terminated for a positive marijuana test could claim discrimination because, like PUMA, Arizona’s medical marijuana law had an anti-discrimination provision.[19]Even where state medical marijuana laws did not have those same protections, some courts have found that taking adverse action against employees or applicants for marijuana use could violate state disability discrimination laws. In Barbuto v. Advantage Sales & Marketing, LLC, [20] for instance, an employee who used medical marijuana to treat her Crohn’s disease filed suit after being terminated for failing a drug test. The Massachusetts Supreme Court found that she could pursue a claim for handicap discrimination under Massachusetts disability law. The court held that federal law did not preempt state law, stating:[t]o declare an accommodation for medical marijuana to be per se unreasonable out of respect for Federal law would not be respectful of the recognition of Massachusetts voters, shared by the legislatures or voters in the vast majority of States, that marijuana has an accepted medical use for some patients suffering from debilitating medical conditions.[21]Similarly, in Wild v. Carriage Funeral Holdings, Inc., [22] the New Jersey appellate court held that an employee who was fired after testing positive for medical marijuana he used to treat pain caused by his cancer could sue his former employer for disability discrimination under New Jersey law for failing to accommodate his medical marijuana use during “off-work hours.”Companies covered by the DFWA should also proceed cautiously before relying on the DFWA to terminate employees testing positive for marijuana. For example, in Noffsinger, the court found that the DFWA did not require the employer to rescind a job offer to the plaintiff. The court reasoned that the “DFWA does not require drug testing. . . . Nor does the DFWA prohibit federal contractors from employing someone who uses illegal drugs outside the workplace, much less an employee who uses medical marijuana outside the workplace in accordance with a program approved by state law.”[23]Practical TakeawaysGiven the trend of states and courts limiting employers’ ability to take adverse action against employees for marijuana use, employers should continue to monitor developments in this area and reexamine their drug-free and drug testing policies. Employers may need to allow for flexibility. Testing for marijuana should be eliminated for applicants and employees in jurisdictions prohibiting such testing, unless there is a clear exception under the law. Even where there are no outright bans, employers should consider allowing exceptions to their policies for employees using marijuana for documented medical reasons.Marijuana use is also on the rise, particularly in states allowing recreational use. Given the tight labor market, employers may want to consider whether testing for marijuana might hinder their ability to recruit talent.Morrison & Foerster associate Alison Frost has contributed to the writing of this post. [1] 21 U.S.C.S. § 812(a).[2] <a target="_blank" href="https://www.deadiversion.usdoj.gov/schedules">https://www.deadiversion.usdoj.gov/schedules</a>; 21 U.S.C.S. § 812(b)(1); 21 C.F.R. § 1308.11.[3] 21 C.F.R. § 1308.11.[4] Federal Acquisition Regulation (FAR) subpart 23.5 implements the prohibitions of the DFWA, and the subpart’s implementing clauses are incorporated into government contracts. FAR 23.505; 52.223-6.[5] Bradley Wine and Steven Cave, “Don’t mean to harsh your mellow, but … contractors and the Drug-Free Workplace Act,” Thomson Reuters (Jan. 16, 2018), <a target="_blank" href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/bltc5c17497d0464a1b/627316214886af2aa2be107a/180116-contractors-drug-free-workplace.pdf">https://media2.mofo.com/v3/assets/blt5775cc69c999c255/bltc5c17497d0464a1b/627316214886af2aa2be107a/180116-contractors-drug-free-workplace.pdf</a>.[6] National Conference of State Legislatures, State Medical Marijuana Laws (2019), http://www.ncsl.org/research/health/state-medical-marijuana-laws.aspx.[7] National Conference of State Legislatures, Marijuana Overview (2019), http://www.ncsl.org/research/civil-and-criminal-justice/marijuana-overview.aspx.[8] States that prohibit adverse actions against employees for off-duty use of marijuana are Arizona, Arkansas, Connecticut, Delaware, Illinois, Maine, Massachusetts, Minnesota, Nevada, New Jersey, New York, Oklahoma, and Rhode Island.[9] The New Jersey Jake Honig Compassionate Use Medical Cannabis Act, 9(a).[10] The New Jersey Jake Honig Compassionate Use Medical Cannabis Act, 9(b).[11] H.B. 1438, 101st Gen. Assembl., Reg. Sess. (Ill. 2019).[12] Me. Rev. Stat. Ann. tit. 7, § 2454 (repealed 2018).[13] Assemb. B. 132, 80th Sess. § 2 (Nev. 2019).[14] 21 U.S.C. § 903.[15] See, e.g., Ross v. RagingWire Telecomms., Inc., 42 Cal. 4th 920, 926 (2008) (dismissing claim under California’s Fair Employment and Housing Act, Government Code, § 12900 et seq., for employer’s refusal to accommodate employee’s use of medical marijuana pursuant to the California Compassionate Use Act of 1996, Health & Safety Code, § 11362.5 and finding “[n]o state law could completely legalize marijuana for medical purposes because the drug remains illegal under federal law”); Brandon Coats v. Dish Network, LLC, 2015 CO 44 (Colo. 2015) (dismissing wrongful discharge claim because employee’s medical marijuana use did not fall within “lawful” activities under Colo. Rev. Stat. § 24-34-402.5 in light of its illegal status under federal law); Garcia v. Tractor Supply Co., 154 F. Supp. 3d 1225, 1230 (D.N.M. 2016) (“To affirmatively require [Defendant-Employer] to accommodate [Plaintiff-Employee’s] illegal drug use would mandate [Defendant-Employer] to permit the very conduct the CSA proscribes.”).[16] 348 Ore. 159 (2010).[17] 338 F. Supp. 3d 78 (D. Conn. 2018).[18] Noffsinger v. SSC Niantic Operating Co. LLC, 273 F. Supp. 3d 326, 334-35 & n.2 (“The very different question presented in Emerald Steel was whether the CSA more generally preempted a provision of Oregon law that authorized the use of medical marijuana. Here, by contrast, the question is whether the CSA preempts a provision that prohibits an employer from taking adverse action against an employee on the basis of the employee’s otherwise state-authorized medicinal use of marijuana.”).[19] Whitmire v. Wal-Mart Stores Inc., 359 F. Supp. 3d 761, 780-81 (D. Ariz. 2019).[20] 477 Mass. 456 (2017).[21] Id. at 465-66.[22] 458 N.J. Super. 416, 433-34 (N.J. Super. Ct. App. Div. 2019), cert. granted, No. C-1043, 2019 N.J. LEXIS 926 (N.J. July 11, 2009).[23] See Noffsinger, 338 F. Supp. 3d at 84.

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As State Cannabis Approval Grows Higher, When Can You Fire?

For decades, many employers have categorically prohibited marijuana use given its illegal status under federal law.  With a growing number of state and localiti

As State Cannabis Approval Grows Higher, When Can You Fire?

Many employers have long used noncompetition agreements, or noncompetes, as an important tool for preventing former employees from unfairly competing against them.  Although only a few states outright ban noncompetes with employees,[1] most states permit employers to use noncompetes as long as they are reasonable and limited to protecting the employer’s legitimate interests.  In recent years, however, state legislatures have increasingly begun chipping away at the power of noncompetes by passing laws limiting the scope of those agreements.  And many other states are considering similar restrictions.An Overview of Recent ChangesIn the last several years, many states, including California, Idaho, Illinois, Nevada, New Mexico Massachusetts, and Washington, have enacted laws restricting the use of employee noncompetes.  Although the types of restrictions vary by state, those limitations generally include: <ul><li>Limiting the post-employment duration of noncompetes;</li><li>Banning noncompetes for certain “low wage” workers who are nonexempt under the Fair Labor Standards Act or who make less than a certain hourly rate;</li><li>Requiring employers to pay former employees during the period of the post-employment restriction;</li><li>Invalidating noncompetes for employees who were terminated without cause; and</li><li>Requiring noncompetes to be governed by the law of the state where the employees work.</li></ul>Some of the most sweeping changes to noncompetes were passed in Washington and Massachusetts.Washington StateOn May 8, 2019, the Washington governor signed House Bill 1450 into law imposing significant limits on noncompetes.  The new law, which goes into effect on January 1, 2020, places a number of roadblocks for employers intending to issue new noncompetes for their employees or even to enforce existing agreements.  Some of the more significant requirements include:<ul><li>Invalidating post-employment noncompetes of 18 months or more, unless an employer can demonstrate with “clear and convincing evidence that a duration longer than 18 months is necessary to protect business or goodwill”;</li></ul><ul><li>Barring the use of noncompetes for employees earning less than $100,000 per year or independent contractors earning less than $250,000 per year (with both numbers adjusted annually for inflation); </li></ul><ul><li>Requiring employers to disclose noncompete terms to certain candidates in writing before they accept an offer of employment, including candidates who are offered annual pay below the earning thresholds listed above;</li></ul><ul><li>Mandating “independent consideration” beyond continued employment if an employee enters a noncompete during his or her employment;</li></ul><ul><li>Continuing to pay an employee’s base salary during the post-employment restricted period for employees who are terminated due to a “layoff” (what constitutes a layoff is undefined); and</li></ul><ul><li>Requiring Washington law to govern any noncompete applicable to a Washington-based employee.</li></ul>Washington law goes further than other state noncompete laws by penalizing employers for noncompliance.  If a court or arbitrator rejects, reforms, modifies, or, even, partially enforces a noncompete, it must require the employer to pay the employee the greater of $5,000 or the employee’s actual damages plus the employee’s costs and attorneys’ fees.  This applies to all noncompete proceedings commenced after January 1, 2020 to enforce the restriction, regardless of when the noncompete was entered. MassachusettsMassachusetts’ new law restricting noncompetes went into effect on October 1, 2018.  Like Washington, Massachusetts added a number of new requirements for noncompetes with Massachusetts based employees.  Some of the more onerous requirements include:<ul><li>Limiting the duration of noncompetes to twelve months post-employment, unless the employee breaches his or her fiduciary duties to the employer or unlawfully takes the employer’s property, in which case the duration can be up to twenty-four months;</li></ul><ul><li>Mandating employers pay at least half of the employee’s highest base salary in the two year period prior to termination of employment, or other “mutually agreed upon consideration”;</li></ul><ul><li>Requiring more than continued employment as the consideration necessary to support a noncompete;</li></ul><ul><li>Requiring the noncompete to be governed by Massachusetts law, and, if the agreement includes a forum selection provision, it must, with limited exceptions, require disputes be litigated in Massachusetts courts;</li></ul><ul><li>Prohibiting noncompetes for employees classified as nonexempt under the Fair Labor Standards Act or employees who are laid off or terminated without cause; and</li></ul><ul><li>Requiring ten days written notice of the noncompete to prospective employees, with at least 10 days’ notice.</li></ul>Hostile Trend Towards Noncompetes Likely To ContinueThe increasing number of noncompete laws is likely to continue as more states consider issuing similar laws limiting noncompetes with employees.  Indeed, as many as 20 states and the federal government are seeking to weaken noncompetes in some way.  On the federal level, Senator Marco Rubio of Florida has introduced a bill that would ban noncompetes for most employees classified as nonexempt under the Fair Labor Standards Act.  Arkansas, Vermont, and Pennsylvania have pending bills seeking to completely ban the use of noncompetes for employees in those states, though like California, these laws would probably not apply to noncompetes in the sale of business context.  The New Jersey Senate is also considering a bill with restrictions largely emulating those instituted by Massachusetts. Legislatures are not alone in tightening restrictions on noncompetes.  Both the Illinois and New York Attorneys General have pursued enforcement actions against employers who use noncompetes, including entering into a settlement agreement with Jimmy John’s to prevent it from having noncompetes with its sandwich makers.  More recently, WeWork entered into a settlement agreement with the New York and Illinois Attorneys General, in which WeWork agreed to rescind noncompetes for certain categories of employees, narrow the scope of those agreements with others, and use new, less restrictive language in its noncompete agreements going forward.What This Means for EmployersGiven the growing number of limitations placed on noncompetes, employers may need to rethink their strategies for using noncompetes to prevent their former employees from unfairly competing.  Long-used form agreements may need to be rethought, alternative ways to prevent unfair competition may need to be explored, and existing agreements with key employees may need to be redrafted. Companies operating in multiple jurisdictions should revisit their noncompete agreements, particularly if they are using the same template agreement across their organization.  Noncompetes that are lawful in one state may now expose the employer to liability if signed by, for example, a Washington-based employee.  Employers should consider working closely with in-house and outside counsel to ensure that any noncompetes protect the employers’ interests rather than endanger them.Employers may also want to consider whether other types of post-employment restrictions, such as nonsolicitation or nondisclosure agreements, could achieve their goals.  Notably, the growing chorus of state noncompete laws generally do not apply to agreements prohibiting former employees from soliciting the employer’s employees or customers or prohibiting disclosure of the employer’s confidential information.  In some instances, nondisclosure and nonsolicitation agreements may be equally effective as noncompetes in protecting the employers from unfair competition.  Employers might also consider agreements that do not expressly prohibit an employee from working for a competitor, but encourage them not to compete.   For example, some states, like New York, apply a relaxed standard of review for agreements that require former employees to forfeit post-employment payments if they work for a competitor. [1] States currently banning noncompetes restricting employees from working for a competitor after their employment are California, North Dakota, and Oklahoma.