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.

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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

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.

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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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.

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Tightening Restrictions on Noncompetes

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elcblog-noncompete_full

Many employers have long used noncompetition agreements, or noncompetes, as an important tool for preventing former employees from unfairly competing against th

Tightening Restrictions on Noncompetes

The American workplace has changed significantly since the passage of the Family and Medical Leave Act (“FMLA”) over 25 years ago.  The ubiquitous use of technology, such as email, instant messaging applications, laptops, and cellphones, have made working from home more commonplace and blurred the lines between home and work life.  In some industries or work cultures, managers expect employees to be accessible at most hours of the day, even when taking approved leaves of absence.  The need for employees to respond to employer inquiries while out of the office is even more likely when employees have valuable institutional knowledge about company business or clients that the employer needs.While employee accessibility may just be part of the modern workplace, contacting an employee on FMLA protected leave may subject an employer to a claim of FMLA interference.  But employees on FMLA leave are not completely firewalled from all contact.  As one court found, “[f]ielding occasional calls about one’s job while on leave is a professional courtesy that does not abrogate or interfere with the exercise of an employee’s FMLA rights.”[1]  So, when does reaching out to an employee of FMLA leave rise to the level of interference?Background on FMLA Interference ClaimsThe FMLA generally provides employees with up to 12 weeks of unpaid leave to, among other things, care for their own or a family member’s serious health condition and care for a newborn or adopted child within one year of birth or adoption placement.  It also provides up to 12 weeks of unpaid leave for employees to address any qualifying exigency arising out of military service and up to 26 weeks of unpaid leave to care for a covered service member with a serious injury or illness. To ensure employees can effectively exercise their rights under the FMLA, the FMLA makes it “unlawful for any employer to interfere with, restrain, or deny the exercise of or the attempt to exercise” an employee’s FMLA rights.[2]  To establish a claim for FMLA interference, an employee must show that (1) he or she is entitled to FMLA leave, (2) his or her employer interfered with that benefit, and (3) that interference caused harm.[3]  The FMLA does not define what types of actions constitute interference.  The sole example of interference in the regulations is “discouraging an employee from using such leave.”[4]  As one court put it, “[t]he line between contacts constituting interference and contacts that do not amount to interference, is indistinct.”[5] When Do Contacts Cross Into FMLA InterferenceWhile it is clear that requiring an employee to perform work on FMLA leave interferes with the employee’s protected leave rights, it is not clear when less onerous requests, such as requests for information, are permissible.  Courts have generally found that “de minimis” work-related contacts, such as calling an employee on FMLA leave to request client contact information, update the employee about workplace news,[6] request keys and passwords to employer equipment and facilities,[7] or discuss administrative information,[8] do not constitute interference with FMLA leave.  If the purpose of these contacts is “limited to the scope of passing on institutional knowledge to new staff, or providing closure on completed assignments, employers do not violate the FMLA by making such calls.”[9] Crossing the line from “de minimis” contacts to requiring an employee on FMLA leave to “work” is more often than not a matter of the amount of time it requires for the employee to respond to the employer’s request.[10]  As a general rule, the more time it takes for an employee to respond to an employer’s request, the more likely that such contact will rise to the level of FMLA interference.  Where an employer’s request merely requires an employee to access information that is readily accessible and such information is important to the employer’s operations, courts have generally found such contact to be de minimis.  For example, a court found that an employer did not interfere with an employee’s FMLA leave when she was briefly contacted by her temporary replacement and boss to obtain basic information relating to her duties, such as the location of certain documents.[11]  In another situation, an employee could not establish an FMLA interference claim related to contacts by her co-workers and supervisors during her leave where those contacts were to update her about a holiday party, ask her to provide client contact and account information, and request information about her medical status and the date she planned to return from leave.[12]  The court found these were de minimis contacts requesting “basic information about clients” or updating the employee about “occurrences at work.”[13]  That court found it significant that no one at the employer had told the employee that she was required to work while on FMLA leave or required her to respond to the emails or telephone calls she received.[14]In contrast, contacts that relate to the employee’s regular job duties or that require a significant amount of time, such as requesting an employee to prepare a memorandum or organize events for a client, likely cross the line into impermissible interference with FMLA leave.[15]  For example, a federal district court found that an employer may have interfered with an employee’s FMLA leave by asking her “to perform 20-40 hours of work” and continuing “to call and email her requiring her to perform work assignments, including updating compliance cases, revising a safety review project, and dropping off files at the office.” [16]  Even when an employee performs more than de minimis work on FMLA leave, it may not create an actionable interference claim if the employee volunteers to work.[17]  For example, the Eight Circuit Court of Appeals found that an employer did not interfere with a physician assistant’s FMLA leave by asking her to complete tasks from home, such as responding to emails and patient phone calls, attending to prescription refills, and reviewing laboratory tests.[18]  In reaching its conclusion, the court found that the employee never expressed reservations about performing work and was actually seeking ways not to deplete her paid time off.  While the court noted that her supervisors’ instructions to work from home during leave approached the line of interference, there was no actual interference because the employee could not show that the “requests were a condition of her employment nor that her compliance with them was anything but voluntary.”[19]In some instances, an employer may need to contact or interview an employee on FMLA leave concerning a workplace investigation of the employee’s conduct or where the employee is needed to serve as a witness.  In such cases, courts have generally found that employers may contact employees for the limited purpose of fulfilling their investigatory obligations, but they cannot coerce or require employees to participate.  For example, the Fourth Circuit Court of Appeals found that an employer does not violate the FMLA by requiring an employee on FMLA leave to attend a meeting relating to an on-going investigation of that employee’s improper conduct.[20]  In that case, the employee, an assistant principal at a school, was diagnosed with post-traumatic stress disorder and went on FMLA leave after he had a physical altercation with a student.  During his leave, the Board asked him to attend a pre‑disciplinary conference related to the incident between the employee and the student.  The employee claimed that conference interfered with his leave by forcing him to work during his leave.[21]  The court disagreed, finding that “the one-time conference was a legitimate piece of an ongoing investigation[.]”[22]  Particularly illuminating for employers, the Fourth Circuit Court of Appeals stated:It is surely true that the investigative processes of any institution are open to abuse, but the record here points to a standard procedure during which due process was accorded to Adams every step along the way.  Adams does not dispute that the Board was entitled to conduct its own investigation into the January 19 incident.  Indeed, school districts must often engage in investigations like this one or else face accusations and lawsuits for not looking promptly into allegations of improper teacher contact with students or violations of school district policies.  The pre-disciplinary conference was part of the investigatory and disciplinary process, which Adams has not adequately linked to his ample FMLA leaves, and seeking the participation of Adams and his attorney in that process did not constitute an impermissible interference with Adams’s FMLA leave.  And Adams never objected or sought a continuance he did not get.[23]On the other hand, a California federal district court found that an employer’s demand for an employee to participate in a workplace investigation could constitute FMLA interference.[24]  In that case, the employee alleged that the employer waited almost a year after the employee first made the allegations to conduct an investigation, and the employer accused the employee of failing to cooperate when he refused to participate in the investigation due to his FMLA leave.[25]  The court concluded that these allegations could support a finding that the employer used the investigation to discourage the plaintiff from taking FMLA leave in violation of the statute.[26]Practical TakeawaysThe purpose of the FMLA is generally to allow employees to take leave from work to meet their family and medical needs without worrying that their job is in danger.  It places the onus on employers to ensure that employees can use the leave for such purposes.  While there may be a perfectly legitimate need to contact an employee on FMLA leave, employers must proceed cautiously to avoid interfering with the employee’s protected leave.  Without clear guidance for determining when such contact may rise to the level of FMLA interference, employers should consider the following general guidelines to mitigate potential risk:<ul><li>Avoid contacting employees on FMLA leave unless necessary.  If it can wait until the employee returns, it is better not to contact the employee.</li><li>If contacting employees on FMLA leave, only ask them to provide basic information that does not require them to perform time consuming tasks or retrieve information that is not easily accessible.  Contacts should generally be for specific purposes and limited in nature.  </li><li>If the employee objects to being contacted, take the objections seriously.  Have in-house or outside counsel review whether further contact is advisable.  </li><li>Train human resource personnel and managers on what contacts are appropriate while an employee is on leave. </li></ul>Document all interactions with employees on FMLA leave, including whether such contact was initiated by the employee or the employer and whether the employee voluntarily agreed to respond to the request.*We gratefully acknowledge the assistance of Victoria Dalcourt Angle in the preparation of this article.[1] Reilly v. Revlon, Inc., 620 F. Supp. 2d 524, 537 (S.D.N.Y. 2009).[2] 29 U.S.C. § 2615(a)(1).[3] See Antekeier v. Lab. Corp. of Am., 295 F. Supp. 3d 679, 684 (E.D. Va. 2018) (citing Adams v. Anne Arundel Cty. Pub. Sch., 789 F.3d 422, 427 (4th Cir. 2015)).[4] 29 C.F.R. § 825.220(b)).[5] Antekeier, 295 F. Supp. 3d at 684.[6] Antekeier v. Lab. Corp. of Am., 295 F. Supp. 3d 679, 684 (E.D. Va. 2018); see also O’Donnell v. Passport Health Commc’ns, Inc., 561 F. App’x 212, 218 (3d Cir. 2014) (finding that emails sent to a plaintiff during FMLA leave requesting that she sign and return paperwork were “de minimis” and “did not materially interfere with her leave”).[7] Daugherty v. Wabash Ctr., Inc., 577 F.3d 747, 751 (7th Cir. 2009) (stating that employer’s repeated requests for keys and passwords “are not more intrusive than the requirement to keep the employer informed about the status of medical leave or otherwise comply with customary employer rules regarding notice.”).[8] Groening v. Glen Lake Cmty. Sch., 884 F.3d 626, 632 (6th Cir. 2018) (holding that contact initiated by School Board with superintendent requesting a breakdown of her time off did not rise to the level of actionable interference).[9] Reilly v. Revlon, Inc., 620 F. Supp. 2d 524, 537 (S.D.N.Y. 2009); see also Massey-Diez v. Univ. of Iowa Cmty. Med. Servs., Inc., 826 F.3d 1149, 1158–59 (8th Cir. 2016) (“For purposes of summary judgment, courts have drawn the line along a distinction between, on the one hand, receiving nondisruptive communications such as short phone calls requesting the employee to pass on institutional knowledge or property as a professional courtesy, and, on the other, requiring the employee to complete work related to tasks or produce work product.”).[10] See Massey-Diez v. Univ. of Iowa Cmty. Med. Servs., Inc., 826 F.3d 1149, 1158–59 (8th Cir. 2016) (collecting cases).  See Smith-Schrenk v. Genon Energy Servs., LLC, No. H-13-2902, 2015 WL 150727, at *10 (S.D. Tex. Jan. 12, 2015) (denying summary judgment where plaintiff alleged that the employer “continued assigning her work” during FMLA leave). [11] Reilly v. Revlon, Inc., 620 F. Supp. 2d at 537.[12] Antekeier v. Lab. Corp. of Am., 295 F. Supp. 3d 679, 685 (E.D. Va. 2018). [13] Id.[14] Id.[15] Id. at 684 (E.D. Va. 2018); see also Hall v. Bd. of Educ. of City of Chi., No. 14-CV-3290, 2018 WL 587151, at *7 (N.D. Ill. Jan. 29, 2018) (denying motion for summary judgment for the employer where plaintiff, a teacher, provided an affidavit alleging that the principal contacted her during her FMLA leave and, among other things, wanted a prompt response to a question of how to access certain educational standards, requested emergency lesson plans for the entire leave period, and directed Plaintiff to post student grades earlier than required.); White v. Cardinal Health Inc., No. 1:05‑CV-0057-ODE-ECS, 2006 WL 8432042 (N.D. Ga. Feb. 28, 2006) (denying employer’s motion for summary judgment where manager called plaintiff repeatedly with work-related questions and demands in a manner that she found harassing, manager asked plaintiff’s family members to perform work-related tasks, plaintiff asked the human resources department and a supervisor to have the manager stop contacting her, and manager encouraged other colleagues to contact the plaintiff); McConnell v. Swifty Transp., Inc., No. 2:04-CV-0153, 2005 U.S. Dist. LEXIS 15565 (2005 WL 1865386), at *22-23 (S.D. Ohio July 29, 2005) (holding that plaintiff’s claim of FMLA interference was sufficient to survive summary judgment where plaintiff alleged that two co-workers called asking him to perform work-related tasks and that one co-worker visited him twice, contacts that the plaintiff characterized as harassing).[16] Smith-Schrenk v. Genon Energy Servs., LLC, No. H-13-2902, 2015 WL 150727, at *3, *10 (S.D. Tex. Jan. 12, 2015) (denying summary judgment where plaintiff alleged that the employer “continued assigning her work” during FMLA leave).[17] Massey-Diez v. Univ. of Iowa Cmty. Med.Servs., Inc., 826 F.3d 1149 (8th Cir. 2016) (where Eighth Circuit found that FMLA permits employees to voluntarily perform work while on leave).[18] Id. at 1154.[19] Id. at 1159-60.[20] 789 F.3d 422 (4th Cir. 2015).[21] Id. at 427.[22] Id. at 427.[23] Id. at 428.[24] Michelucci v. Cty of Napa, No. 18-cv-05144-HSG, 2019 WL 1995332, at *6 (N.D. Cal. May 6, 2019).[25] Id.[26] Id.

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FMLA Leave in the Digital Age: When Contacting an Employee on FMLA Leave Constitutes Interference

FMLA Leave in the Digital Age: When Contacting an Employee on FMLA Leave Constitutes Interference

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The American workplace has changed significantly since the passage of the Family and Medical Leave Act (“FMLA”) over 25 years ago.  The ubiquitous use of techno

FMLA, CFRA, NPLA, ADA, FEHA, NYPFL, SFPPLO.  The alphabet soup of leave laws with which employers must comply is enough to make the heads of even the most seasoned HR professionals and in-house counsel spin.  With an increasing number of municipalities jumping into the game, the number of laws keeps growing.  Realistically, mere mortals cannot memorize the details of each law, and, luckily, it is not necessary as long as they know how to spot issues and when to seek counsel.  Today, we address three key topics to help employers stay ahead of their leave of absence obligations: (1) recognizing leave issues buried within an employee’s questions, statements, or conduct; (2) keeping abreast of the existence of state and local laws in addition to the better-known federal laws; and (3) understanding the difference between the right to protected time off and the availability of full or partial wage replacement during time off. Recognizing Leave IssuesEmployee comments that might set off alarm bells for an experienced HR professional or in-house attorney may easily be overlooked by the front-line supervisors who have the most contact with employees.  It is crucial that supervisors and other people responsible for HR compliance be able to spot these issues. Employee rights to time off generally derive from the following sources:<ul><li>State and local paid sick leave laws;</li><li>The federal Family and Medical Leave Act (FMLA)[1] and state and local equivalents;</li><li>California’s Pregnancy Disability Leave law (PDL)[2] and similar laws in other jurisdictions;</li><li>Federal and state military leaves;[3]</li><li>Miscellaneous state leave laws protecting time off for jury duty, voting, witness duty, crime victims (domestic violence, sexual assault, stalking), emergency responders, school activities, organ donation, etc.;[4]</li><li>Paid vacation (not mandated by law, but employer must comply with its own policies); and</li><li>Time off beyond whatever the law or company policy mandates as a reasonable accommodation under the Americans with Disabilities Act (ADA), Section 503 of the Rehabilitation Act, and state equivalents.[5]</li></ul>Attorneys and HR professionals may think about leave issues in terms of these statutes, but the people who often have the most regular contact with employees—front line supervisors—do not typically think about employee issues in these legal buckets.  It is therefore important that supervisors and other company employees responsible for HR compliance be sensitized to an employee’s statements and actions that might implicate his or her right to leave.  More important than being able to distinguish among the finer points of PDL, FMLA, and ADA is the ability to recognize the following kinds of employee statements as possible triggers of a right to a job protected leave of absence:<ul><li>“My wife was wounded serving in Iraq and will be stuck in bed for the next two months.”  (FMLA and state military leave laws)</li><li>“Ugh.  I think I have the flu.”  (Federal FMLA and state law equivalents if the illness is sufficiently severe)</li><li>“My boyfriend hit me and I need Thursday morning off to go to court to get a restraining order.”  (Domestic violence leave under state law)</li><li>“My son has been suspended from school, and the principal wants to meet with me next week.”  (School leave under state law)</li><li>“The CIA is listening to my thoughts through my fillings.”  (Time off under the FMLA and state law equivalents for mental disability; reasonable accommodation under the ADA and state law equivalents)</li><li>“I’m sorry I’m late for work again.  I forgot to refill my Ritalin prescription.”  (Reasonable accommodation under the ADA and state law equivalents for ADHD)</li><li>“I realize I’ve used up all my FMLA time due to my surgery, but my doctor says I’ll be as good as new if I can just have a few more weeks off.”  (Reasonable accommodation under the ADA and state law equivalents)</li></ul>The time and resources devoted to training supervisors how to spot these issues will be time and resources well spent.  Not only will they help avoid lawsuits, but they may prevent morale problems and bad publicity.State and Local Regulation of Leaves From WorkCalifornia employers should know by now that California mandates paid sick leave, but some employers might not be aware that, as of January 2019, seven California cities have their own paid sick leave laws:  Berkeley, Emeryville, Los Angeles, Oakland, San Diego, San Francisco, and Santa Monica.[6]  Some of these laws conflict with California’s law and with each other.  For employers with employees in other states, things get even more complicated.  For example, the state of New York does not have a paid sick leave law, but New York City does.[7]  Nearby New Jersey has a state paid sick leave law, but no local laws which would be preempted under the state law.[8]Family and medical leave laws pose similar issues for employers.  California employers with 50 or more employees have long had to comply with the federal FMLA and the California Family Rights Act (CFRA).[9]  Since January 1, 2018, smaller California employers with 20 or more employees must comply with the New Parent Leave Act (NPLA), which allows eligible employees to take up to 12 weeks of unpaid, job protected leave to bond with a new child.[10]  Like California, the state of New York has its own version of the FMLA—the New York Paid Family Leave Benefits Law (NYPFL),[11] and New Jersey has the New Jersey Family Leave Act (NJFLA).[12]  It is not only states and cities that traditionally have more favorable laws for employees that are getting into the act.  Tennessee, for example, does not have a state equivalent to the FMLA, but has the Tennessee Maternity Leave Act (TMLA), which provides leave for qualified individuals for adoption, pregnancy, childbirth, and infant nursing.[13] In almost every case where multiple laws apply to the same employee, the employer must comply with the law that offers the most protection to the employee.  To stay compliant, employers must be vigilant in keeping abreast of federal, state, and local laws in every location where the company has employees.  This obligation can be especially tricky for companies with a smattering of employees spread throughout the country.  Companies that have one sales representative in each state or region can face compliance challenges as can employers that permit employees to work remotely from a city or state where the company has no offices or other employees. Some employers minimize the compliance burden by adopting company-wide policies applicable to all employees.  This approach requires the employer to adopt a policy that complies with the most employee-friendly leave laws applicable at any company location.  Although doing so may cost the company more money, in return the employer gets consistency and avoids morale problems that might arise when employees in one city learn that a colleague working at a facility a few miles away receives more paid sick leave or baby bonding leave simply because of geography.  Even companies that go this route must remain vigilant.  Given the pace at which state and local laws are being enacted, today’s most protective law can quickly become tomorrow’s has-been.Distinguishing Between Protected Time Off and Wage Replacement Anyone responsible for administering leaves of absence should be mindful of these basic rules:<ul><li>Leave Entitlement ≠ Entitlement to Be Paid.</li><li>Entitlement to Be Paid ≠ Leave Entitlement.</li></ul>While these rules seem straightforward, employers sometimes confuse laws that guarantee employees time away from work with laws or programs that offer full or partial wage replacement while an employee is off work. California’s Paid Family Leave (PFL) is one of the bigger culprits when it comes to confusion.[14]  PFL provides up to six weeks of partial wage replacement to an eligible employee who needs time off to provide care for a seriously ill family member or bond with a new child.  PFL is a form of wage replacement funded through a payroll tax paid by employees, but it does not entitle employees to any time off or reinstatement.  In fact, a person need not even be employed to receive PFL so long as she or he is actively looking for work at the time the person needs to care for a family member.[15]  The state of New York, by contrast, has taken a different approach than California with New York’s Paid Family Leave Benefits Law (NYPFL).  NYPFL applies to all private employers that employ one or more employees and: (i) guarantees time off for reasons parallel to those under the FMLA; and (ii) provides partial wage replacement during leave.  The leave is funded by employee payroll taxes and is paid through Paid Family Leave insurance that the employer must secure. An Illustration of the Myriad Laws in ActionConsider a pregnant woman, Wilma, who works as the controller of the Acme Company, which has 15 employees in California.  Wilma becomes disabled and is ordered to bed rest for the last two months of her pregnancy.  California’s Pregnancy Disability Leave law (PDL) guarantees her up to four months off work due to the disability and the right to be reinstated to her position (or a comparable position if her original position no longer exists) upon end of the disability.  Wilma’s job is safe despite the small size of the Acme Company and her extended time off.  PDL does not, however, entitle Wilma to any pay during her disability leave.  Wilma will, however, likely be eligible for partial wage replacement through California’s State Disability Insurance (SDI) (funded through payroll deductions) after a one-week waiting period.[16]  Wilma may use accrued paid sick leave or possibly accrued vacation, during the waiting period. Wilma delivers the baby through a normal vaginal delivery and her doctor certifies her as disabled under PDL for six weeks after the birth.  Wilma then decides she wants a few months of maternity leave to bond with her new baby.  Wilma may be entitled to Paid Family Leave (PFL) to partially cover her wages during maternity leave, but the Acme Company is not legally obligated to provide Wilma with any time off for baby bonding.  With only 15 employees, the Acme Company is not covered by the CFRA or NPLA, which guarantees employees of larger employers up to 12 weeks off for baby bonding after the end of any pregnancy disability.  The Acme Company, with only 15 employees, may voluntarily offer employees time off for baby bonding, or the company may allow Wilma to use accrued vacation, but despite the availability of PFL to pay for time off with the baby, Wilma has no protected right to time off for baby bonding.If the Acme Company were located in New York instead of California, Wilma would be entitled to guaranteed time off for baby bonding and partial wage replacement under NYPFL.  On the other hand, New York does not have an equivalent to California’s PDL.  Unlike in California, the Acme Company in New York would not have been required to hold open Wilma’s job for the three and a half months she was disabled due to pregnancy and childbirth.  Acme Company might have decided that it could not function without a controller for more than three months and lawfully terminated Wilma’s employment before the baby was born.ConclusionThe patchwork of leave laws throughout the country creates many traps for the unwary.  Employers of all sizes in all states are well-served by ensuring that HR professionals and supervisors are trained and sensitive to the issues.  It is also crucial to stay abreast of the quickly expanding universe of laws and to consider ways of mitigating the compliance burden, such as adopting uniform company policies in all locations.[1] 29 U.S.C. § 2601 et seq.[2] Cal. Code Regs., tit.2, § 11042[3] See e.g., the Uniformed Services Employment and Reemployment Rights Act (USERRA), 38 U.S.C. § 4301 et seq.; FMLA, 29 U.S.C. §§2612(a)(1)(E), 2612(a)(3); Cal. Military & Vet. Code § 395.10.[4] California Labor Code §§ 230-230.8.[5] 42 U.S.C. § 12101; see also, e.g., California Fair Employment and Housing Act, Cal. Gov. Code § 12940; New York State Human Rights Law, Article 15, § 290 et seq.[6] Healthy Workplaces, Healthy Families Act of 2014, Cal. Labor Code §245 et seq.; Berkeley Paid Sick Leave Ordinance, Berkeley Municipal Code, Ch. 13.100; Emeryville Minimum Wage and Paid Sick Leave Ordinance, § 5-37.03; Los Angeles Minimum Wage Ordinance, §187.04; Oakland Paid Sick Leave ordinance, Oakland Code of Ordinances, § 5.92.030; San Diego Earned Sick Leave and Minimum Wage Ordinance, San Diego Municipal Code § 39.0101; San Francisco Paid Sick Leave Ordinance, San Francisco Administrative Code Ch. 12W; Santa Monica Minimum Wage Ordinance, Santa Monica Municipal Code Ch. 4.62.[7] New York City Earned Sick and Safe Time Act, N.Y.C. Admin. Code §§ 20-911 to 20-924.[8] New Jersey Earned Sick Leave, N.J.S.A. 34:11D-1.[9] California Family Rights Act (CFRA), Cal. Gov. Code § 12945.2[10] California New Parent Leave Act (NPLA), Cal. Gov. Code § 12945.6.[11] New York Paid Family Leave Benefits Law, final regulations, tit. 12 N.Y.C.C.R. Part 380 et seq.[12] New Jersey Family Leave Act, N.J.S.A. 34:11B-16[13] Tennessee Maternity Leave Act, Tenn. Code Ann. 4-21-408.[14] Cal. Unemp. Ins. Code § 3300 et seq.[15] To complicate things a bit more, employers in San Francisco with 20 or more employees must supplement employees’ PFL by the amount needed to true up the employee to 100% of his or her regular salary.  See San Francisco Paid Parental Leave Ordinance, San Francisco Police Code 33H (2016).[16] Cal. Unemp. Ins. Code § 2601 et seq.

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Navigating the Seas of Federal, State, and Local Leave of Absence Laws

Navigating the Seas of Federal, State, and Local Leave of Absence Laws

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FMLA, CFRA, NPLA, ADA, FEHA, NYPFL, SFPPLO.  The alphabet soup of leave laws with which employers must comply is enough to make the heads of even the most seaso

Trade secrets and personal information are key assets for most employers. Join us for a webinar to discuss recent developments affecting the protection of trade secrets in California (including restrictive covenants) and the handling of personal information.Topics will include:<ul><li>How do recent Defend Trade Secrets Act (DTSA) developments, including the applicability of the DTSA to misappropriation before its enactment date and immunity for whistleblowers, affect employers?</li><li>Are employee non-solicitation agreements still enforceable in California after AMN and Barker?</li><li>What does the newly enacted California Labor Section 925 mean for employee mobility?</li><li>How does the expansion of data protection laws, from the EU General Data Protection Regulation to the California Consumer Privacy Act, affect employers?</li></ul>

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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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Of Counsel

Mary Race assists clients with a wide range of challenging privacy compliance and data security matters. Her practice focuses on managing privacy risks and helping clients develop and implement comprehensive privacy programs across a variety of industries, including tech, retail, manufacturing, advertising, social media, and communications.

Mary Race

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MoFo Webinar: Employment Traps in the Digital Age: Trade Secret (Including Restrictive Covenant) and Privacy Issues Abound

MoFo Webinar: Employment Traps in the Digital Age: Trade Secret (Including Restrictive Covenant) and Privacy Issues Abound

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Trade secrets and personal information are   key assets for most employers. Join us for a webinar to discuss recent   developments affecting the protection of t

The machines are taking over.  Not always apparent, but Artificial Intelligence[1] (AI) and machine learning[2] (ML) are finding footholds in numerous industries.  One area in which AI is rapidly on the rise relates to employment practices and employee control.  But before embracing the future, employers should be well informed about the risks inherent with ceding control to robots. Black Box Hiring PracticesCompanies are only as good as their employees.  With the current strong job market, employers of all sizes struggle to identify, recruit, and hire talent.  As companies grow, many have turned to novel technologies to assist, guide, and (in some instances) take over the talent recruitment and selection process.  According to a December 2016 Harvard Business Review article, in some cases AI screening software systems used by businesses eliminate more than 70 percent of job applicants without any human interaction.[3]Companies tout the efficiencies offered by AI hiring algorithms.  They can save time and money, and (in theory) help identify the candidates best-suited for open positions.  But, what happens when an apparently-qualified job seeker is summarily rejected because a computer algorithm decided she was not a good fit?  The candidate may ask for more details—specifically what in her resume eliminated her from consideration?  Was it the school the candidate attended?  Maybe the computer rejected her because it thinks she had an unacceptable  gap between jobs based on the summer she spent in the Middle East for what appears (to the computer program) to be a religious pilgrimage.  Perhaps the candidate’s professed interest in baking set off silent alarms in the AI framework because it has seen too many data sets that confirm bakers are almost always poor people managers.  Or maybe the candidate submitted her application very late at night, and the AI has determined candidates emailing after business hours more than likely procrastinators and underperformers. Of course, some of these connections appear absurd.  Whether a company is reviewing 10 resumes for a position or 1,000, challenging decisions—not always cleanly tied to concrete data points—must be made when screening or eliminating potential job applicants. The benefit of AI and ML is they (for better or worse) make connections using data points humans never would consider.  This benefit can have an unsavory side.  Where it may save the company time and money in the hunt to identify top talent, unrefined AI may have hidden biases that create illegal hiring decisions without company personnel even realizing it.  Because “algorithms mimic human decision making,” they can “learn from past successes, which may embed existing bias.”[4]  Take the example of a company dominated by white male leaders that has successfully run for years, consistently posting profits with above-average employee satisfaction.  The AI is likely to be programmed with a goal of maintaining that level of success, and the company may inadvertently input data points that provide a bias towards preferring candidates with profiles that are largely white men.  Even if the company intends to eliminate bias from AI selections, the AI making the initial screening decisions is unlikely to worry about discriminatory outcomes.  Using AI and ML systems with such latent biases risks excluding applicants based on protected classes (like age, race, gender, or disability) and exposing the company to discrimination claims. Although such concerns may encourage employers to limit the use of AI and ML, companies can still benefit from the use of such technology if they implement appropriate data input, human oversight, and reasonable guardrails to minimize biases in these programs.  Companies should regularly observe data sets used by the AI system, with a particular focus on how the AI is incorporating, connecting, and utilizing the data provided.  An example of an appropriate guardrail is adding a coded instruction limiting the weight AI applies to certain factors likely to result in biased decisions (like gender, country of origin, and religious affiliation).[5]  Employers should also consider limiting or prohibiting AI from analyzing names or other data points about an applicant that may expose the AI to learning a candidate’s protected characteristics (e.g., ethnicity).  Continual monitoring of AI and ML systems will also increase the likelihood of them remaining free of unlawful biases.Big DataIn a similar vein, most major companies are using large datasets known as “Big Data”[6] to better manage and track inventory, automatically identify and service equipment failures and security breaches, create safer work environments, and improve employee efficiency.  Big Data can also be replete with hidden liabilities for the unaware.  If a company, for example, is harvesting biometric information for employees, such as fingerprints, handprints, or optical scans, for security access to facilities or for time-tracking systems, the company could face increased litigation risks. For example, Illinois state courts have recently experienced a significant increase in privacy class actions under the Illinois Biometric Information Privacy Act (BIPA), which requires employers to provide written notice and obtain consent from employees and customers prior to collecting or storing biometric data.  Although many states do not currently have the same protections as Illinois, other states like Texas and Washington have proposed laws governing employer use of biometric information. The data some employers are capturing for seemingly legitimate reasons could run afoul of various privacy protections.  For example, a company may desire to improve safety for workers by embedding connected sensors in employee uniforms to detect toxins or chemicals in the workplace or monitor employee vitals when performing physically demanding tasks.  If those same sensors inadvertently monitor employee movement patterns or identify legally protected medical conditions, absent an employer having a legitimate justification for collecting that data and appropriate notice to the employees, it could expose the employer to liability in some jurisdictions.  Likewise, the employer could use data collected on employee movements in the workplace to inadvertently make unlawful employment decision.  For example, if an employee takes frequent breaks during the workday, the company may discipline the employee, believing the employee is violating company policy or failing to meet performance standards.  But, in reality, the employee may be taking increased breaks due to a protected medical condition that causes him to use the restroom frequently.   While using Big Data in the workplace can make good business sense, employers should keep in mind the following considerations when relying on Big Data.<ul><li>Know what data is being collected and why it is being collected.  Indiscriminately collecting any and all data available is not advised.  Companies should be mindful of what types of data they are collecting, and why they are collecting it.  Generally, when deciding what information to collect, document the strong business case for collecting that data to show how its impact on employee privacy interests will be limited.  Excessive data collection is harder to defend.  Working with experienced in-house or external professionals and attorneys to review and audit data collection can help identify potential liabilities and put appropriate safeguards in place to limit exposure.  </li></ul><ul><li>Give proper notice to employees.  Even in jurisdictions where notice of data collection is not required, companies should be transparent with their employees regarding data collection that might infringe on employee privacy.  Such transparency can reduce the possibility of litigation and related bad press.</li><li>Be thoughtful about how long the data is stored.  Data storage is continually getting cheaper, but that does not mean companies have free rein to store gargantuan amounts of information on employees.  The longer companies store data, the more potential for legal risk.  If maintaining data for long periods is needed for a legitimate business reason, companies should consider aggregating the data in a manner that removes personalized employee information.</li></ul>[1] “Artificial Intelligence” is “a branch of computer science dealing with the simulation of intelligent behavior in computers” or “the capability of a machine to imitate intelligent human behavior.”  “Artificial Intelligence,” Merriam-Webster Online Dictionary, 2019, available at <a href="https://www.merriam-webster.com/dictionary/artificial%20intelligence">https://www.merriam-webster.com/dictionary/artificial%20intelligence</a>.[2]  “Machine Learning” is “the process by which a computer is able to improve its own performance (as in analyzing image files) by continuously incorporating new data into an existing statistical model.”  “Machine Learning,” Merriam-Webster Online Dictionary, 2019, available at <a href="https://www.merriam-webster.com/dictionary/machine%20learning">https://www.merriam-webster.com/dictionary/machine%20learning</a>.[3] “Hiring Algorithms Are Not Neutral,” Harvard Business Review, G. Mann and C. O’Neil, December 9, 2016, available at <a href="https://hbr.org/2016/12/hiring-algorithms-are-not-neutral">https://hbr.org/2016/12/hiring-algorithms-are-not-neutral</a>.[4] Id.[5] Morrison & Foerster’s senior of counsel Lokke Moerel claims that bias does not result because “there is an error in the algorithm, but because the data use to train the algorithm are ‘biased.’”  She further argues that the practice of “blinding” algorithms to certain data points does not promote equality or fairness.  Rather, the solution is to allow the algorithm access to, but actively train the algorithm against overreliance on, those factors.   “Algorithms Can Reduce Discrimination, but Only with Proper Data,” 2018, available at <a href="https://iapp.org/news/a/algorithms-can-reduce-discrimination-but-only-with-proper-data/">https://iapp.org/news/a/algorithms-can-reduce-discrimination-but-only-with-proper-data/</a>[6] “Big Data” is “an accumulation of data that is too large and complex for processing by traditional database management tools.”  “Big Data,” Merriam-Webster Online Dictionary, 2019, available at <a href="https://www.merriam-webster.com/dictionary/big%20data#examples">https://www.merriam-webster.com/dictionary/big%20data#examples</a>.

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Employment Practices and Future Technologies – Taking the Human out of Human Resources

Employment Practices and Future Technologies – Taking the Human out of Human Resources

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The machines are taking over.  Not always apparent, but Artificial Intelligence[1] (AI) and machine learning[2] (ML) are finding footholds in numerous industrie

On March 7, 2019, the U.S. Department of Labor (the “DOL”) issued a Notice of Proposed Rulemaking, proposing to raise the minimum salary level for employees to be exempt from overtime requirements under the Fair Labor Standards Act (“FLSA”).  Under current FLSA regulations, employees are entitled to overtime for any hours they work over 40 in a workweek unless they qualify for an exemption based on their job duties and are paid a minimum annual salary of at least $23,660 (or $455 per week). While the proposed rule leaves the job duty requirements for the FLSA exemptions unchanged, it proposes to raise the minimum annual salary to $35,308 (or $679 per week) for employees classified as exempt from the FLSA under the executive, administrative, professional, outside sales, and computer employee exemptions.  The DOL estimates that this change would make an additional 1.1 million employees eligible for overtime pay.The proposed rule rescinds a previous rule issued in May 2016 by the DOL under the Obama administration, which proposed to raise the FLSA minimum annual salary to $47,476 with automatic increases of the minimum salary threshold every three years.  A Texas federal court enjoined that rule, and the U.S. Court of Appeals for the Fifth Circuit ultimately dismissed the DOL’s appeal of that order, at the DOL’s request, in September 2017. Although the new proposed rule establishes a more modest threshold than the previous administration’s rule, the proposed minimum salary level is nearly 50% more than the current salary level of $23,660.  The proposed rule will allow up to 10% of the new minimum salary level to be satisfied using nondiscretionary compensation, such as bonuses and commissions, so long as those amounts are paid at least annually.  If adopted, the proposed rule will require the DOL to propose potential increases to the salary threshold every four years through a notice and comment process.  The proposed rule also contemplates raising the minimum annual salary under the highly-compensated workers exemption from $100,000 to $147,414. Practical Implications For now, the proposed changes remain exactly that – proposed.  Employers do not need to start reclassifying employees or raising salaries just yet.  The proposal will undergo a 60‑day notice and comment period, during which the DOL will allow interested parties to submit comments.  The DOL anticipates the final rule becoming effective in January 2020.  The rule will likely be subject to legal challenges by both worker advocate and business industry groups.  Whether those challenges will be successful or the DOL will make substantive changes to the final version of the rule remains to be seen. In the meantime, employers can take practical steps to prepare for the potential changes.  Because it can take time to understand the full financial and administrative impact of these changes, companies should consider whether it makes sense to start assessing exempt employees who are below the proposed salary threshold.  Employers have several options for those employees, including reclassifying their positions as nonexempt, raising their salaries to be in line with the new minimum salary threshold, or capping the hours those employees work each week to avoid accruing overtime.  The proposed rule may also provide an opportunity for employers who have not recently audited their exempt workforce to confirm that all exempt positions, especially those paying close to the current or proposed minimum annual salary threshold, are correctly classified.  Such an audit will not only help employers identify and correct potential misclassification issues, but it will also allow the company to determine which positions might need to be adjusted based on the proposed rule. Although the proposed rule will likely impact many U.S. employers, companies must continue to review their compliance with state wage and hour exemption requirements, which can be more stringent than the FLSA.  For example, California employees must earn a minimum annual salary of $49,920 ($45,760 for employers with 25 or fewer employees) to be properly classified as exempt from the California overtime laws.Morrison & Foerster LLP will keep clients updated on developments with the proposed rule.  Please reach out to our Employment & Labor Group with questions.

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What Do the DOL’s Proposed Changes to the FLSA Overtime Rules Mean for Employers?

What Do the DOL’s Proposed Changes to the FLSA Overtime Rules Mean for Employers?

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On March 7, 2019, the U.S. Department of Labor (the “DOL”) issued a Notice of Proposed Rulemaking, proposing to raise the minimum salary level for employees to 

California’s “reporting time pay” regulations are back in the news after the recent California appellate court decision in Ward v. Tilly’s, Inc. held that employees who worked on-call or “call-in” shifts were entitled to half-shift reporting time pay, even when not required to physically come to the job site.  In light of this new “report for work” interpretation, it is important for companies with California employees to understand the reporting time pay requirements and strategies to avoid costly wage and hour litigation arising from potential violations of these rules.Background: The LawCalifornia reporting time pay obligations arise from California’s idiosyncratic quasi-legislative Industrial Wage Commission (IWC) Wage Orders promulgated in the 1940s which provide in relevant part:Each workday an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee’s usual or scheduled day’s work, the employee shall be paid for half the usual or scheduled day’s work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee’s regular rate of pay, which shall not be less than the minimum wage.(Cal. Code Regs., tit. 8, § 11070, subd. 5(A) [“Wage Order 7”] [emphasis added].)  The Wage Order provides exceptions to the rule where:<ul><li>the reason an employee works less than half of a scheduled shift is due to certain external factors such as physical threats, utility failures, or acts of God, (id. at subd. 5(C).);</li><li>employees who perform “standby” work, so long as the standby work performed is outside of that employee’s regularly scheduled shift. (id. at subd. 5(D).); or </li><li> the employee voluntarily leaves work early.</li></ul>While the Ward case dealt only with California employees subject to Wage Order 7 (covering the mercantile industry), Wage Orders 1 to 16 (out of 18), which taken together govern everything from manufacturing to transportation to “amusement and recreation” to “handling products after harvest,” also contain the same reporting time pay provisions.Application of the Reporting Time Pay RequirementApplication of Section 5 of the Wage Order is fairly straightforward in most cases.  An employee who “reports for work” and is dismissed before the half-way point of her scheduled shift is entitled to payment as though she had worked half of her shift.  Assuming the employee was scheduled for only one shift in a day, the minimum daily amount owed to the employee for an abbreviated shift, including for time worked and reporting time pay, would be two hours (applicable for shifts of 4 hours or less) and the maximum daily amount owed would be four hours (for shifts of eight hours or greater).  Reporting time pay is not counted as hours worked for purposes of determining overtime.So an employee who reported to work for a 7-hour shift, and was dismissed after 2 hours, would be entitled to 1.5 hours of reporting time pay, to bring her daily pay up to 3.5 hours for the day (half of her 7-hour scheduled shift).  If the extra 1.5 hours of reporting pay received by the employee brought her above 40 hours for the workweek (e.g., from 39.5 to 41), these hours would not be counted as overtime hours since they were hours not actually worked.Ward and “Reporting” For WorkAlthough the reporting time pay calculations appear largely clear, Ward “muddied the waters” for determining what it means for an employee to “report for work.”  The case, a putative class action on behalf of employees of the clothing retailer, Tilly’s, involved employees who had both on-call and scheduled shifts.  For their on-call shifts, Tilly’s required employees to call in two-hours prior to the start of their shift to see if they needed to report.  If they were not required to physically report to work, they were not paid for the on-call shift. The divided Ward court held that the telephonic “reporting” required of Tilly’s employees met the regulatory definition of “report for work” thereby triggering the employees’ entitlement to reporting time pay.  The court noted that although telephonic reporting was not a common practice when the Wage Order was issued, telephonic reporting and in-person reporting gave rise to the same concerns about inefficient and abusive scheduling practices that caused inconvenience and expense to workers.  Thus, the court found that the regulation should extend to telephonic reporting practices because the alleged on-call shifts imposed significant limitations on the employees, such as interfering with them making other plans (either professional or personal) for times where they might be required to work.Tilly’s and the Ward dissent argued that the plain meaning of the Wage Order and the legislative intent at the time of its adoption made clear that to “report for work” should only apply to employees who physically traveled to a work site before being dismissed.  Citing to the multi-faceted structure of recent predictive scheduling laws as an example, the dissent challenged the practicability of the majority’s new rule that telephonic reporting should trigger reporting time pay:How are we—an appellate court limited to the narrow record before us—to determine how much notice is enough to avoid a violation of the wage order? What if employees are required to call in eight hours in advance instead of two? How about 12 hours? Twenty-four? Three days? A week? At oral argument, Ward’s counsel seemed to offer a concession that a requirement employees call in 24 hours in advance would be legal. But a concession by one attorney in one case cannot bind all of the plaintiffs’ lawyers across the state who might choose to file similar lawsuits.(Ward at *55.) Strategies for ComplianceIn light of the ruling in Ward, employers who utilize call-in or on-call procedures for their employees in California should review their policies and practices to ensure that they do not conflict with California’s reporting time pay requirements post-Ward.  While it remains unclear how much call-in notice is required to avoid reporting-time pay obligations, after Ward, employers should assume that any same-day call-in or on-call requirement will trigger reporting time pay.  California employers who wish to maintain call-in shifts and avoid reporting time pay obligations should extend the call-in notice period as far in advance of the employee’s shift as practical.  Even so these practices may provoke legal challenges from the plaintiffs’ bar.Ward also presents an opportunity for California employers to assess vulnerabilities in their reporting time pay practices.  Managers and payroll departments should have a clear understanding that the Wage Orders contain very narrow exceptions for not providing reporting time pay.  Employees who are dismissed early due to lack of work, poor performance, or scheduling errors are still entitled to reporting time pay, even if called back to work later the same day.  Similarly, employees called in for meetings on their off days, including for termination, are entitled to reporting time pay of at least two hours. California employers should also consider reviewing their scheduling practices to minimize reporting time pay requirements.  Reporting time pay requirements are only triggered when employees work less than half of their “usual or scheduled day’s work,” and the amount of the pay entitlement is likewise dependent on the length of the scheduled shift (as well as the employee’s regular rate of pay).  If work slowdowns or other conditions regularly cause employees to be dismissed early for reasons not exempt under the Wage Order, companies could utilize shorter shifts for certain employees who are more frequently dismissed to reduce the number of shifts requiring reporting time pay and the amounts of reporting time pay required per shift.  Although each company and business will have unique scheduling needs and practices, it is important to strike the right balance in navigating California reporting time pay issues to minimize legal risk while meeting the operational needs of the business.

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Call-in & Collect: California Reporting Time Pay Compliance Strategies

Call-in & Collect: California Reporting Time Pay Compliance Strategies

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California’s “reporting time pay” regulations are back in the news after the recent California appellate court decision in Ward v. Tilly’s, Inc. held that emplo

Whatever good intentions its proponents may claim, the Labor Code Private Attorneys General Act of 2004 (PAGA) created perverse incentives for plaintiff’s lawyers to file representative actions seeking civil penalties for violations of the California Labor Code on behalf of all “aggrieved employees” of the named plaintiff’s employer.  The named plaintiff often does not know she is being used for purposes of bringing a PAGA action.  The alleged violations are often hyper-technical or trivial, if a violation at all – “gotcha” claims, as plaintiff’s lawyers like to call them.  The “aggrieved employees” – who can number in the tens of thousands if the target is a large employer – most often have suffered no injury.  The employer, facing potentially business-destroying liability, too often settles for an amount of money bearing no relationship to the violations allegedly committed.  And the plaintiff’s lawyers pocket 30-35 percent of the settlement for themselves.This article addresses some of the pressing issues around PAGA, in three parts.  First, it provides an overview of salient aspects of PAGA and the case law interpreting it.  Next, it discusses a recently-filed lawsuit that seeks to have PAGA declared unconstitutional.  Finally, it offers suggestions for warding off a PAGA action or winning the action if brought.The takeaway:  In today’s climate, virtually every California employer is vulnerable to a PAGA attack and taking steps to avoid or defeat PAGA liability should be given high priority.PAGA:  An OverviewPAGA deputizes an “aggrieved employee” – any person employed “by the alleged violator and against whom one or more of the alleged violations was committed”[1] – to file suit as proxy for the State of California to recover civil penalties on behalf of himself and other “aggrieved employees” for alleged violations of the Labor Code.  Seventy-five percent of any penalties recovered in the action, whether by settlement or judgment, go to the State, and the remaining 25 percent go to the alleged aggrieved employees.[2]  While a single penalty for a single violation suffered by a single individual may be trifling, when aggregated across an entire workforce for multiple alleged violations, the amount of these penalties can be staggering.  And, attorneys’ fees are awardable to the plaintiff employee who prevails in the action, but not to the prevailing employer.[3]Starting in 2009, a number of court decisions eliminated several defenses theretofore available to employers defending PAGA actions.  Notably among them, in Arias v. Superior Court,[4] the California Supreme Court held that PAGA actions are not subject to state-law requirements for a case to be certified as a class action.  In Iskanian v. CLS Transportation Los Angeles, LLC,[5] the Supreme Court held that an arbitration agreement waiving representative PAGA claims is unenforceable as a matter of California public policy.  In light of Arias and Iskanian, plaintiff’s lawyers increasingly join class action claims with PAGA claims or solely allege PAGA claims in their complaints.  In the past year, two additional court of appeal decisions addressing the scope of PAGA have emboldened plaintiffs’ lawyers to interpret it even more broadly, resulting in increasingly expansive – and expensive – PAGA suits.[6]THE CONSTITUTIONAL CHALLENGEApparently deciding enough is enough, a recently-organized association holding itself out as representing California-based employers filed suit against the State of California on November 28, 2018, seeking to have PAGA declared unconstitutional on separation of powers, procedural and substantive due process, excessive fines and unusual punishment, and equal protection grounds.[7]  The association’s complaint is well-researched, thorough, and thoughtful.  The opening paragraphs sum up its position:“Are California business owners who inadvertently make a payroll error equivalent to the worst perpetrators of hate crimes?  That’s the twisted logic that, more than a decade ago, led the state legislature to pass a harmful law called the Private Attorneys General Act (PAGA).“PAGA was conceived as a means to help employees right workplace wrongs without further burdening the state bureaucracy.  Trial attorneys quickly discovered that they could use the law for their own benefit; today, thousands of PAGA complaints are filed annually against large and small businesses, nonprofit charities, and even labor unions.“PAGA, as written and practiced, is unconstitutional.  With this complaint, we’re asking the state to enforce its own laws – rather than transferring the state’s power to private attorneys who operate for their own personal gain.”[8]This author wishes the association success in overturning PAGA.  But best case, it will take years to achieve that result.  What does an employer do in the meanwhile?  That question is addressed next.AVOIDING OR DEFEATING A PAGA ACTIONThere are many things an employer can do to minimize the risk of getting sued in a PAGA action, and many ways to successfully defend itself if sued; surveying all of them is beyond the scope of this article.  Rather, we focus on two important issues.An Ounce of PreventionGiven the ever increasing number of new PAGA filings, it is critical that employers have policies and practices that comply with the Labor Code and the IWC Wage Order applicable to the employer’s business.  Periodically conducted audits to ensure that these policies and practices remain legally compliant are advised.  Human resource professionals must stay current on legal developments to address any needed updates.  PAGA makes unique the challenges a California employer faces, and these challenges should not be underestimated.  While perhaps trite, it is no less true:  an ounce of prevention is worth a pound of cure.Defeating a PAGA Action as UnmanageablePAGA empowers an “aggrieved employee” only to sue on behalf of other employees who are “aggrieved,” i.e., employees “against whom one or more alleged violations was committed.”[9]  California trial courts are increasingly striking PAGA claims where the experience of every allegedly aggrieved employee would be required to show that they were, in fact, aggrieved, rendering the claim unmanageable because countless mini-trials would be necessary before the aggrieved employees were known and the claim could proceed.[10]  So too are federal district courts striking PAGA claims when they cannot be manageably tried.[11]  Consistent with this emerging body of law, the California Supreme Court recently recognized the common-sense fact that PAGA actions must be “manageable.”[12]Unmanageability has thus emerged as a powerful weapon in defendants’ arsenal.  It is the plaintiff’s burden to show how her PAGA action can be manageably tried, and if she fails to meet her burden, the action cannot go forward.  While unmanageability may not apply in a particular case, it should at least be considered in every case, in the course of devising a winning strategy.[1] Cal. Lab. Code, § 2699, subd. (c).[2] Id., § 2699, subd. (i).[3] Id., § 2699, subd. (g)(1).[4] (2009) 46 Cal.4th 969.[5] (2014) 59 Cal.4th 348.[6] Atempa v. Pedrazzani (2018) 27 Cal.App.5th 809, review den. Jan. 16, 2019; Huff v. Securitas Security Services USA, Inc. (2018) 23 Cal.App.5th 745, rehg. den. June 13, 2018, review den. Aug. 8, 2018.[7] California Business & Industrial Alliance v. Becerra, Orange County Superior Court Case No. 30-2018-01035180-CU-JR-CXC (filed Nov. 28, 2018).[8] Id., Complaint at 2.[9] Cal. Lab. Code, § 2699, subd. (c).[10] See, e.g., Sanchez v. McDonald’s Restaurants of California, Inc. (Los Angeles Super. Ct., Dec. 15, 2016, No. BC499888) Court Ruling at pp. 4-5 [striking PAGA representative allegations]; and see Banta v. American Medical Response Inc. (Los Angeles Super. Ct., Apr. 25, 2018, No. BC393113) Order [same]; Martinez v. California Pizza Kitchen, Inc. and Hernandez v. California Pizza Kitchen, Inc. (Los Angeles Super. Ct., Mar. 30, 2015, Nos. BC373758, BC441231) Orders [same]; Bright v. 99 Cents Only Stores (Los Angeles Super. Ct., Dec. 7, 2011, No. BC415527) Order [same]; Munoz v. Acapulco Rest., Inc. (Los Angeles Super. Ct., Oct. 21, 2010, No. BC393912) Order [same].[11] See, e.g., Amiri v. Cox Communications California, LLC (C.D. Cal. 2017) 272 F.Supp.3d 1187, 1195 [striking PAGA claims as unmanageable where the alleged Labor Code violations were based on the plaintiff’s experience rather than on policies or practices common to “aggrieved employees,” and “liability determinations will require individualized inquiries”]; Salazar v. McDonald’s Corp. (N.D. Cal., Jan. 5, 2017, No. 14-cv-02096-RS) 2017 WL 88999, at *9 [granting defendant’s motion to strike representative PAGA claim]; Brown v. American Airlines, Inc. (C.D. Cal., Oct. 5, 2015, No. CV 10-8431-AG (PJWx)) 2015 WL 6735217, at *4 [“Court finds manageability issues exist regarding PAGA overtime claims here.  There appears to be too many individualized assessments to determine PAGA violations concerning overtime pay.”]; Raphael v. Tesoro Ref. and Mktg. Co. LLC (C.D. Cal., Sept. 25, 2015, No. 2:15-CV-02862-ODW) 2015 WL 5680310, at *3 [“Court would have to engage in a multitude of individualized inquires making the PAGA action unmanageable and inappropriate.”]; Bowers v. First Student, Inc. (C.D. Cal., Apr. 23, 2015, No. 2:14-CV-8866-ODW (Ex)) 2015 WL 1862914, at *4 [same]; Litty v. Merrill Lynch & Co. (C.D. Cal., Nov. 10, 2014, No. CV 14-0425 PA PJWx) 2014 WL 5904904, at *3 [same]; Ortiz v. CVS Caremark Corp. (N.D. Cal., Mar. 19, 2014, No. C-12-05859 EDL) 2014 WL 1117614, at *3-4 [same].[12] Williams v. Superior Court (2017) 3 Cal.5th 531, 559.

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PAGA: A Call To Arms

What the Supreme Court’s “Epic”  Decision Means for Employers

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Whatever good intentions its proponents may claim, the Labor Code Private Attorneys General Act of 2004 (PAGA) created perverse incentives for plaintiff’s lawye

PAGA:  A Call To Arms

A California bill that has emerged from the #MeToo movement and is likely to increase employers’ costs and exposure in defending harassment claims will take effect on January 1, 2019.  As briefly discussed in our <a href="https://elc.mofo.com/topics/annual-california-legislative-recap.html">October 2018 Employment Law Commentary</a>, California Governor Jerry Brown signed into law SB 1300, amending the California Fair Employment and Housing Act (FEHA) in a manner that impacts employers in both the workplace and the courts.  This Commentary discusses in more detail SB 1300’s changes to FEHA, the likely impact it will have on California employers, and the key issues defendants should keep in mind when facing harassment and discrimination claims brought by current or former employees under FEHA.The #MeToo Movement’s Recent ImpactEven before the rise of the #MeToo movement, California was one of the most employee-friendly forums—if not the most employee-friendly one—in the country for protections against harassment and discrimination in the workplace.  Over the past year, the public and media outcry over high-profile examples of sexual harassment in the workplace have led numerous companies voluntarily to change their workplace policies and practices to protect alleged victims of sexual harassment.For example, some employers require employees to sign mandatory arbitration agreements requiring employees to bring any employment claims in arbitration, including claims of sexual harassment.<a href="file:///C:/Users/mls13/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/NSCWOFQJ/FINAL%20DRAFT%20-%20Dec%20ELC%20-%20SB%201300%20Article-1404327%20track%20changes.docx#_ftn1">[1]</a> Given the recent MeToo movement, such mandatory arbitration agreements covering sexual harassment claims have come under attack.  Google and Facebook, two of the largest employers in California, recently announced that they would no longer require employees to arbitrate sexual harassment and assault claims.<a href="file:///C:/Users/mls13/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/NSCWOFQJ/FINAL%20DRAFT%20-%20Dec%20ELC%20-%20SB%201300%20Article-1404327%20track%20changes.docx#_ftn2">[2]</a>  eBay, Airbnb, and others promptly followed suit.  Still other California employers may soon face public pressure to carve out certain types of claims from their arbitration provisions.  Absent an arbitration requirement, employees will be able to litigate their sexual harassment claims in a public forum, file claims on behalf of similarly situated employees based on allegedly common harassment practices in the workplace, and potentially use the media and other forms of public pressure to their advantage.Further, last month, in response to the allegations asserted against former Chief Judge of the Ninth Circuit Alex Kozinski, the Ninth Circuit announced that it had created a new position of director of workplace relations to address workplace harassment issues in its courts.<a href="file:///C:/Users/mls13/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/NSCWOFQJ/FINAL%20DRAFT%20-%20Dec%20ELC%20-%20SB%201300%20Article-1404327%20track%20changes.docx#_ftn3">[3]</a>  With the Ninth Circuit taking this unprecedented step to prevent and resolve workplace harassment within its workforce, Ninth Circuit judges may very well expect the same from private employers appearing in its courts.  It also can reasonably be expected that the California federal courts will take plaintiffs’ claims of harassment and discrimination even more seriously than before.Protections Against Harassment for Employees Under SB 1300SB 1300 is part of the California legislature’s efforts to ensure that as many California employers as possible provide more robust and expansive protections for their employees in the workplace.  While many employers want to protect their employees against sexual harassment, SB 1300 greatly increases the potential liability from harassment and discrimination claims than ever before.SB 1300 Lowers the Plaintiffs’ Burden of Proof Under FEHASB 1300 lowers the burden and standard of proof for plaintiffs to prevail on sexual harassment as well as other forms of harassment under FEHA.  SB 1300 adds new Government Code § 12923 to FEHA, making it easier for plaintiffs to prove harassment claims in several significant ways.  Instead of drafting explicit statutory language to address the particular issue, SB 1300 made the following legislative “findings”:<ul><li>It affirms the standard set forth by Justice Ruth Bader Ginsburg in her concurrence in Harris v. Forklift Systems (1993) 510 U.S. 17 that a plaintiff does not have to prove “tangible productivity has declined as a result of the harassment”; rather, a plaintiff only need prove “a reasonable person” would find such “harassment so altered working conditions as to make it more difficult to do the job.”<a href="file:///C:/Users/mls13/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/NSCWOFQJ/FINAL%20DRAFT%20-%20Dec%20ELC%20-%20SB%201300%20Article-1404327%20track%20changes.docx#_ftn4">[4]</a></li><li>It rejects the Ninth Circuit’s opinion in Brooks v. City of San Mateo (2000) 229 F.3d 917, by recognizing that “[a] single incident of harassing conduct” can establish a hostile work environment “if the harassing conduct has unreasonably interfered with the plaintiff’s work performance or created an intimidating, hostile, or offensive working environment.”</li><li>It affirms the rejection of the “stray remarks doctrine” in Reid v. Google, Inc. (2010) 50 Cal.4th 512, by noting that “[t]he existence of a hostile work environment depends upon the totality of the circumstances and a discriminatory remark, even if not made directly in the context of an employment decision or uttered by a non-decision-maker, may be relevant, circumstantial evidence of discrimination.”</li><li>It rejects Kelley v. Conco Companies (2011) 196 Cal.App.4th 191, and finds that “[t]he legal standard for sexual harassment should not vary by type of workplace.”</li><li>Finally, in a way summarizing the impact of the entirety of Government Code § 12923, the legislature affirms the decision in Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, and states: “Harassment cases are rarely appropriate for disposition on summary judgment.”</li></ul>Although legislative findings and declarations are generally not binding on courts, the California legislature’s largely unprecedented act of adding a standalone code section to FEHA for the sole purpose of expressing its understanding of the appropriate legal standards surrounding harassment claims may have more force than usual.  As we have seen over the past year, increased media, public, and legislative attention on workplace conditions arising from the #MeToo movement has time and again led to significant change.  At a minimum, plaintiffs will rely heavily on Government Code § 12923 and the cases explicitly affirmed by the legislature in support of their harassment claims, especially when opposing summary judgment motions from employers.  While a defendant’s likelihood of success in defending against harassment claims will, to a certain extent, still come down to the judge, arbitrator, or administrative agency official assigned to the case, it is hard to imagine how overall SB 1300 will not result in increased costs and exposure for employers facing harassment claims in California.SB 1300 Expands Employer’s Liability for Nonemployee ActionsBefore SB 1300, employers could be liable for the acts of nonemployees with respect to sexual harassment only.  SB 1300, however, amends Government Code § 12940(j)(1) to now expose employers to potential liability for the actions of nonemployees for all forms of harassment. In light of this change, employers should heed the implicit recommendations by the Legislature in Government Code § 12950.2 authorizing employers to provide bystander intervention training in order to motivate bystanders to take action when they observe problematic behaviors in the workplace.  The development and provision of this type of bystander intervention training may be costly for employers in the short run, but also could result in significant savings in costs, time, and resources down the road by preventing the filing of lawsuits.SB 1300 Eliminates the Ability for Defendants to Recover Attorneys’ FeesBefore SB 1300, courts were authorized under FEHA and California Code of Civil Procedure § 998 to award the prevailing party in a lawsuit—whether the plaintiff or the defendant—reasonable attorneys’ fees and costs, including expert witness fees.  SB 1300, however, makes the award of attorneys’ fees now one-sided.  Beginning January 1, 2019, prevailing defendants are prohibited from being awarded fees and costs unless the court finds that the action was “frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so.”  Gov. Code § 12965(b).  Needless to say, this is an extremely high standard for employers to meet to recover attorneys’ fees and costs, and SB 1300 therefore effectively eliminates the advantages to defendants of making Code of Civil Procedure § 998 offers to plaintiffs in FEHA cases.  SB 1300 Prohibits Certain Releases and Nondisparagement AgreementsFinally, the impact of SB 1300 does not just extend to the courtroom.  Beginning January 1, 2019, employers will be prohibited from requiring employees to sign either releases of FEHA claims or nondisparagment agreements, in exchange for a bonus, a raise, employment, or continued employment.  Gov. Code § 12964.5.  This prohibition, however, does not apply to negotiated settlement agreements between an employer and employee to resolve a lawsuit, administrative agency complaint, or internal complaint.  Nevertheless, employers will have to ensure that their standard agreements comply with these new prohibitions, and can no longer take certain pre-litigation actions to try to avoid the filing of lawsuits by current and former employees.What Steps Should Employers Take in Response to SB 1300With SB 1300 taking effect on January 1, 2019, employers should think hard about how these significant changes to FEHA could impact the way they litigate harassment claims in California courts.  Being less likely to prevail on summary judgment of harassment claims, employers may want to reconsider how they approach settlement with current and former employees bringing harassment claims under FEHA.  Employers should keep in mind, however, that the 2017 Tax Cuts and Jobs Act passed by Congress amended the Internal Revenue Code so that no deductions can be made for either (1) settlements or payments related to sexual harassment or sexual abuse claims if they are made subject to a nondisclosure agreement, or (2) attorney’s fees related to such settlements or payments.But employers should not stop there.  The best defense against harassment and other FEHA-related claims is to try to prevent as many problems from arising in the workplace as possible.  With the increased costs of litigation that SB 1300 will usher in, employers should ask whether the harassment and discrimination trainings provided are sufficient, analyze whether their employee handbooks, internal complaint procedures, and other policies are sufficiently robust, and ensure that their agreements and business practices are in full compliance with SB 1300 and other recently enacted employment laws in California.<a href="file:///C:/Users/mls13/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/NSCWOFQJ/FINAL%20DRAFT%20-%20Dec%20ELC%20-%20SB%201300%20Article-1404327%20track%20changes.docx#_ftn5">[5]</a><a href="file:///C:/Users/mls13/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/NSCWOFQJ/FINAL%20DRAFT%20-%20Dec%20ELC%20-%20SB%201300%20Article-1404327%20track%20changes.docx#_ftnref1">[1]</a> Employers’ use of mandatory arbitration agreements also seems to be on the rise given the Supreme Court’s approval of the use of class action waivers.  See, e.g., Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018); <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/blt0535e6c5e90a7d6f/62731617220ab5285f519049/180529-employment-law-commentary.pdf">May 2018 Employment Law Commentary</a>.<a href="file:///C:/Users/mls13/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/NSCWOFQJ/FINAL%20DRAFT%20-%20Dec%20ELC%20-%20SB%201300%20Article-1404327%20track%20changes.docx#_ftnref2">[2]</a> Google, Company Announcements: A note to our employees, available at https://www.blog.google/inside-google/company-announcements/note-our-employees/; Douglas MacMillan, “Facebook to End Forced Arbitration for Sexual-Harassment Claims,” Wall Street Journal, Nov. 9, 2018, available at https://www.wsj.com/articles/facebook-to-end-forced-arbitration-for-sexual-harassment-claims-1541799129.<a href="file:///C:/Users/mls13/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/NSCWOFQJ/FINAL%20DRAFT%20-%20Dec%20ELC%20-%20SB%201300%20Article-1404327%20track%20changes.docx#_ftnref3">[3]</a> United States Courts for the Ninth Circuit, News Release: Ninth Circuit Announces Appointment of First Director of Workplace Relations, http://cdn.ca9.uscourts.gov/datastore/ce9/2018/05/21/R2_Judicial_Council_Workplace_Initiative.pdf.<a href="file:///C:/Users/mls13/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/NSCWOFQJ/FINAL%20DRAFT%20-%20Dec%20ELC%20-%20SB%201300%20Article-1404327%20track%20changes.docx#_ftnref4">[4]</a> 510 U.S. at 26.<a href="file:///C:/Users/mls13/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/NSCWOFQJ/FINAL%20DRAFT%20-%20Dec%20ELC%20-%20SB%201300%20Article-1404327%20track%20changes.docx#_ftnref5">[5]</a> See, e.g., SB 820, SB 826, SB 1343, AB 2770, AB 3109.

California Says #MeToo with SB 1300: The Impact on Employers

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California Says #MeToo with SB 1300: The Impact on Employers

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A California bill that has emerged from the #MeToo movement and is likely to increase employers’ costs and exposure in defending harassment claims will take eff