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

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Co-Chair, Global Employment and Labor Practice

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

Andrew Turnbull

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

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

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

Potential Exceptions Under FTC’s Non-Compete Ban

FTC Issues Final Rule Banning Non-Competes

Maryland Poised to Continue Trend of Jurisdictions Mandating Pay Transparency in Job Postings

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.

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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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

elcblog-may- 2018

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

The Fourth District Court of Appeals in San Diego on November 1, 2018, issued AMN Healthcare Inc. v. Aya Healthcare Services Inc., in which it called into question the continuing viability in California of employee non-solicitation clauses found in many employment contracts and proprietary information, invention assignment, and confidentiality agreements.  This was a question that had been left open in Edwards v. Arthur Anderson (2000) 44 Cal. 4th 937, the California Supreme Court decision that had swept away any judicially created “narrow restraint” exceptions to California’s Business and Professions Code § 16600’s basic dictate that all non-competition provisions in employee contracts are void.  Edwards confirmed that the only exception to Section 16600 are the narrow exceptions under § 16601 (sale of goodwill of a business), § 16602 (dissolution of a partnership), and § 16602.5 (dissolution of LLC or termination of LLC interest).  Edwards did not address employee non-solicitation agreements because they were not before the court.  Accordingly, employee non-solicitation agreements were still generally understood to be enforceable in California under Loral Corp. v. Moyes (1985) 174 Cal.App.3d 268, which had not been overturned by Edwards.  While based on a unique factual record, AMN Healthcare nonetheless questioned whether Moyes was reliable authority to support employee non-solicitation agreements in light of the California Supreme Court’s decision in Edwards.FactsAMN Healthcare, Inc. and Aya Healthcare Services, Inc. are competing providers of healthcare professionals, in particular travel nurses, to medical care facilities throughout the country.  The individual defendants were travel nurse recruiters who had left AMN to join Aya.  The individual defendants had signed confidentiality and non-disclosure agreements that included provisions preventing them from “soliciting any employee of AMN to leave the service of AMN for at least a one year period.”  It was undisputed that the travel nurses were employees of AMN while on temporary assignment to hospitals around the country.The individual defendants left AMN to work for Aya, performing the same recruiting duties they had for AMN.  AMN then filed a complaint against Aya and seven individual defendants alleging a number of different theories, including violation of their employee non-solicitation agreements.  Aya and the individual defendants claimed the employee non-solicitation clause was an unenforceable restraint of trade under section 16600 and thus was void.  AMN filed a summary judgment motion arguing that the employee non-solicitation provision was valid under the Loral Corp. v. Moyes case.  The trial court ruled that the non-solicitation of employees provision violated section 16600 because it prevented individual defendants from engaging in their lawful trade or profession – soliciting and recruiting travel nurses on temporary assignments with AMN – for at least one year post termination, making it essentially a non-competition clause.AnalysisThe facts in AMN Healthcare are arguably unique and some may say could have led to a narrower ruling from the appeals court.  As recruiters, the employees’ actual jobs were to solicit employees and other persons for employment with the particular hospitals served by their employer.  The appeals court also pointed out that travel nurses generally work a 13-week schedule and thus, with a one-year non-solicitation agreement, there were four periods of 13 weeks during which the recruiters working for the new recruiting company would not be able to contact certain employees.  This is distinguishable from the executive in the Moyes case, who moved to another company as an executive subject to an agreement prohibiting him from soliciting employees from his former employer.  The executive in Moyes was still able to pursue his occupation as an executive even with the employee nonsolicit, whereas the nonsolicit provisions for the travel nurse recruiters in AMN Healthcare precluded them from doing the essence of their job.  Of course, this is, from the court’s perspective, exactly what B&P § 16600 and Edwards say is unlawful in California.Thus, as noted above, the appeals court could have limited its decision to the individual facts of this case since the employee non-solicitation clause restricted the individual defendants from pursuing the core of their employment, unlike the executive in Moyes, who just couldn’t solicit former employees but could do his job as an executive.  However, the court did not do this.  Some may say it was dicta, but others may argue that the discussion and reasoning in the case should apply to all employee non-solicitation agreements found in employment agreements and proprietary information and confidentiality agreements, even where the employee is still able to perform his or her new position.Current StatusAMN Healthcare is not necessarily final.  The case was only recently issued, and a request for reconsideration could be made to the appeals court or a petition for review to the California Supreme Court could be filed.  Another possibility is that the case will be “depublished,” which would limit the decision to the individual parties in the case without precedential value to attack employee non-solicitation clauses in other cases.Practical ConsiderationsGiven the lack of finality and the peculiar facts in AMN Healthcare, it may be premature to predict the ultimate impact of the case.    Even if the decision stands as written, the case law must further develop to determine whether the Moyes decision has been definitively overruled or limited to the unique circumstances of AMN Healthcare.  The AMN Healthcare court simply said that after Edwards, it was hard to see how Moyes was still “viable.”    The California Supreme Court may accept the case to determine if employee non-solicitation clauses are still legal in California under B&P § 16600.  Such action would remove any precedential value of AMN Healthcare pending review.  Thus, Moyes would remain an authoritative case for employee non-solicitation clauses until the California Supreme Court rules.We will keep you posted.

Are Employee Non-Solicitation Clauses Still Legal In California?

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Lloyd W. Aubry, Jr. is a member of our Employment and Labor Group. Lloyd’s practice encompasses all aspects of employment and labor law, including litigation and counseling.

Lloyd Aubry

Lloyd Aubry’s practice encompasses all aspects of employment and labor law, including litigation and counseling. He represents public and private clients in a variety of matters relating to wage and hour law, employment discrimination, wrongful discharge, safety and health issues, and National Labor Relations Act (NLRA) issues. Mr. Aubry represents clients before administrative agencies and in state and federal court. A significant part of his practice involves expert testimony and consulting on issues relating to the Department of Industrial Relations. In this capacity, he has served for both employers and employees.

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Are Employee Non-Solicitation Clauses Still Legal In California?

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The Fourth District Court of Appeals in San Diego on November 1, 2018, issued AMN Healthcare Inc. v. Aya Healthcare Services Inc., in which it called into quest

Another year has passed in the California Legislature, with new laws and amendments affecting California employers.  Among the more significant changes, bills prompted by the #MeToo movement, including the new requirement that corporate boards of directors include women, have been passed.  Other changes include amendments to the Fair Pay Act regarding potential employees’ salary history and amendments potentially increasing the number of international commercial disputes brought in California. On the federal side, we are seeing regulatory changes as Trump appointees reverse Obama-era policies and regulations. This Commentary helps companies navigate these changes, all of which are effective January 1, 2019, unless otherwise noted.California State Laws and AmendmentsSB 826 – Corporations: Women on Boards of DirectorsWith the signing of SB 826, California becomes the first state to require that corporate boards include women.  This bill adds Sections 301.1 and 2115.5 to the Corporations Code, mandating that a publicly held domestic or foreign corporation whose principal executive offices are located in California have a minimum of one female director on its board.  Corporations can increase the number of directors on a board to comply with this rule. In a letter addressing his decision to sign SB 826, Governor Brown acknowledged the “potential flaws that indeed may prove fatal to [the bill’s] ultimate implementation,” but noted that “it’s high time corporate boards include the people who constitute more than half of the ‘persons’ in America.”SB 1300 – Unlawful Employment Practices: Discrimination and HarassmentSB 1300 is part of the package known as the “#TakeTheLead” bills, a group of what some have called the “boldest” anti-sexual harassment bills in the country. The bill amends the California Fair Employment and Housing ACT (FEHA) to make it unlawful for an employer—in exchange for a raise or bonus, or as a condition of employment or continued employment—to require the signing of a nondisclosure agreement or waiver of the right to file claims.  SB 1300 also expands the scope of FEHA to include nonemployees with respect to any type of harassment prohibited under FEHA—not just sexual harassment.  The bill also prohibits awarding fees and costs to a prevailing defendant unless the court finds the action was frivolous, unreasonable, or groundless. AB2334 – Worker Safety MandatesIn 2016, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) adopted the “Improve Tracking of Workplace Injuries and Illnesses” rule. This rule sought to improve workplace safety through expanded access to injury-and illness-related information. In 2017, OSHA announced its intent to relax the workplace injury and illness reporting requirements. Seemingly in response to this announcement, California passed AB 2334, which requires Cal/OSHA to monitor rulemaking and implementation of the rule.  If Cal/OSHA determines that OSHA has “eliminated” or “substantially diminished” the requirements for employers to submit injury and illness data, Cal/OSHA is required to convene a committee to evaluate how to implement the changes necessary to protect the goals of the rule. Effectively immediately, AB 2334 also changes the statute of limitations for citations or violations regarding recordkeeping requirements from six months after the occurrence of the violation to either the date the violation is corrected or the date the division discovers the violation.AB2587 – Disability Compensation: Paid Family LeaveUnder California’s paid family leave law, an employer may require an employee to take up to two weeks of earned but unused vacation before, and as a condition of, the employee’s receipt of disability benefits. Prior to AB 2587, the law required one week of this vacation leave to be applied to the seven-day waiting period before the receipt of benefits. Because the waiting period was previously eliminated, AB 2587 amends section 3303.1 to make the statutes consistent.  AB 2455 – Home Care ServicesFollowing strong opposition, and a veto of similar legislation in October 2017, Governor Brown signed AB 2455 amending the Home Care Services Consumer Protection Act, which requires licensure and regulation of home care organizations. The bill notes that “[h]ome care aids who are organized [by labor organizations] are more likely to have higher wages, greater access to training, and lower turnover rates.” To achieve that goal, the new provisions require the State Department of Social Services to provide personal information of the home care organizations to labor organizations for the purpose of organizing and representing home care aids. The new provisions apply only to newly registered home care aides and prohibit a labor organization from using this information for any purpose other than employee organizing, representation, or assistance activities.AB2770 – Privilege: Sexual HarassmentAB 2770—a sexual harassment bill that passed the Legislature with unanimous bipartisan support--protects employers and sexual harassment victims from potential defamation suits. Under existing law, employers’ responses to reference checks from prospective employers regarding a former or current employee’s job performance or qualifications were protected from libel or slander claims as privileged, as long as the communications were made without malice.  AB2770 extends the privilege to complaints of sexual harassment by an employee, without malice, to an employer. AB 2770 also allows employers to inform potential employers about the sexual harassment investigation and findings. AB 2770 protects employers from defamation claims by allowing employers to inform prospective employers during reference checks of an employee’s past harassing conduct, including providing information about sexual harassment investigation and findings.AB 3109 – Contracts: WaiverStemming from the #MeToo movement, AB 3109 adds a new section to the Civil Code making waivers in contracts or settlement agreements void and unenforceable to the extent they waive a party’s right to testify in an administrative, legislative, or judicial proceeding concerning alleged criminal conduct or sexual harassment if the party has been required or requested to attend the proceeding pursuant to a court order, subpoena, or written request from an administrative agency or the legislature. SB 820 – Settlement Agreements: ConfidentialityAnother result of the #MeToo movement, SB 820 prohibits provisions in settlement agreements that prevent the disclosure of factual information relating to certain claims of sexual assault, sexual harassment, or harassment or discrimination based on sex, that are filed in a civil or administrative action. The bill also makes such a provision void as a matter of law and against public policy. The bill creates an exception for a provision that shields the identity of the claimant and all facts that could lead to the discovery of his or her identity, if the provision is included at the request of the claimant.AB 1976 – Lactation AccommodationsBefore AB 1976, employers were required to make reasonable efforts to provide an employee with the use of a room or other location, other than a toilet stall, for lactation purposes. AB 1976 now requires employers to make reasonable efforts to provide an employee with a room or other location, other than a bathroom, for these purposes.  Employers may seek an exemption if they can demonstrate that making a space available outside of a bathroom would pose an undue hardship. SB 1402 – Joint Liability for Motor Carrier ServiceBeginning in 2019, motor carrier service providers in California may be jointly and severally liable for unpaid wages, unreimbursed expenses, damages and penalties, and interest, for workers supplied by labor contractors. Supported by the California Trucking Association, the bill amends the Labor Code to add provisions requiring that a customer that engages or uses a port drayage motor carrier will share joint and several liability with the motor carrier. SB 1412 – Criminal Background ChecksIn the past, employers were generally prohibited from seeking particular conviction history information of an applicant, with some exceptions, such as when an employer is required by law to obtain information regarding a criminal conviction of an applicant or when an individual who has been convicted is prohibited by law from holding the position sought by the applicant.  To avoid conflicts with federal law, SB 1412 clarifies how employers can use conviction history to screen job applicants.  For example, the new law allows employers to consider a “particular conviction” relevant to the job when screening applicants. The new changes leave the exceptions in place but include additional clarifications.  For instance, an employer may also obtain information regarding a particular conviction, regardless of whether that conviction has been expunged, judicially ordered sealed, statutorily eradicated, or judicially dismissed. AB 1565 – Liability for SubcontractorsUnder section 218.7 of the Labor Code, a direct contractor is liable for subcontractors for unpaid wage liabilities. Effective immediately, AB 1565 repeals the previous provisions of section 218.7 that relieved direct contractors for liability for anything other than unpaid wages and fringe or other benefit payments or contributions including interest owed. AB 1654 – Exceptions to PAGASome employers in the construction industry may find reprieve following passage of AB 1654. Under the Labor Code Private Attorneys General Act of 2004 (PAGA), aggrieved employees are entitled to file private lawsuits to recover civil penalties for alleged violations of the Labor Code. AB 1654 will prohibit employees in the construction industry from recovering civil penalties under PAGA if the employees are subject to collective bargaining agreements in effect any time before January 1, 2025 that contain a grievance and binding arbitration procedure to redress violations. SB 766 – Representation in International Commercial ArbitrationSince the 1998 California Supreme Court case Birbower v. Superior Court of Santa Clara County, 949 P2d 1(Cal. 1998), California has been a disfavored jurisdiction for international arbitration.  Under previous law, foreign lawyers were not permitted to appear in international arbitrations in California without engaging local co-counsel. Under the new law, however, lawyers who are not members of the California bar may now appear in California and represent their clients without engaging local counsel. These individuals must be admitted to practice law in a state or territory of the U.S. or D.C. or be a member of a recognized legal profession in a foreign jurisdiction. The individuals must also be in good standing in every jurisdiction in which he or she is admitted or otherwise authorized to practice. These individuals will be subject to disciplinary jurisdiction of the State Bar.  This development is likely to result in an increase in international arbitration in California.AB 2282 – Amendments to the Fair Pay ActJust last year, Labor Code § 432.3 was enacted, prohibiting employers from relying on salary history as a factor for determining whether to offer employment or make pay decisions. To continue addressing disparities in pay equity, AB 2282 amends Labor Code §§ 432.3 and 1197.5 to:<ul><li>Define previously undefined terms, including “applicant,” “pay scale,” and “reasonable request”; </li></ul><ul><li>Clarify that, while an employer cannot ask for salary history, an employer may ask for salary expectations;</li></ul><ul><li>Prohibit using prior history to justify any disparity in compensation; and</li></ul><ul><li>Permit compensation decisions based on a current employee’s existing salary, as long as the wage differential is justified based one or more of the following factors: (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production; and (4) a bona fide factor other than race or ethnicity, such as education, training, or experience.</li></ul>AB 2610 – New Exception to Meal Period RequirementsAB 2610 creates an exception to current law that prohibits an employer from employing an employee for a work period of more than five hours without providing the employee with a meal period of not less than 30 minutes. Now, a commercial driver employed by a motor carrier transporting nutrients and byproducts from a commercial feed manufacturer to a customer located in a remote rural area may commence a meal period after six hours of work, if the regular pay of the driver is no less than one and one-half times the state minimum wage and the driver receives overtime compensation.SB 1500 – Expanded Protections to Service MembersSB 1500 amends Section 394 of the Military and Veterans Code to prohibit businesses from barring U.S. Armed Forces members because the member is wearing his or her military uniform.FederalWith Congress gridlocked, the most significant changes are occurring in regulatory agencies as Trump appointees have supplanted Obama appointees. For instance, as we wrote about in our September issue, we have already begun to see changes in National Labor Relations Board decisions and rulemaking following President Trump’s appointment of a new General Counsel as well as new members to replace Obama-appointed members whose terms expired. For instance, to address the Obama Board’s decision in Browning-Ferris, 362 NLRB No. 186 (2015), which loosened the standard for determining whether two separate employers should be considered “joint employers” and thus share each other’s labor law liability and bargaining obligations to a union, the Trump Board has proposed a rule that will reverse this decision and return the law on joint employer to its traditional form.The Department of Labor’s Wage and Hour Division also plans to make changes to the overtime rule under the Fair Labor Standards Act (FLSA).  On August 27, 2018, the Department announced that it would hold public “listening sessions” for those members of the public who are interested in changes to the overtime rule. By way of background, the Obama Administration had previously issued a rule to be effective in late 2016 that raised the threshold in the salary basis test to $47,476, which essentially doubled the prior threshold required to qualify for the executive, administrative, or professional exemptions.  A Texas federal judge enjoined the rule which has never taken effect. The Trump Department of Labor, while rejecting the Obama rule, has stated that it plans to update the overtime rule, including raising the threshold but not anywhere near to where the Obama Administration intended to set it.  Other potential changes include indexing the level, lower regional levels for low-cost areas, and lower levels for non-profits. We are likely to see more regulatory changes as Trump appointees continue to reverse Obama-era policies and regulations.

Annual California Legislative Recap

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Annual California Legislative Recap

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Another year has passed in the California Legislature, with new laws and amendments affecting California employers.  Among the more significant changes, bills p

When Donald Trump took office in 2017, the members of the NLRB (Board) were predominantly appointees of President Obama.  During the Obama presidency, the Board issued decisions that were mostly favorable to the interests of organized labor and its employee-members.  Those decisions reversed years of Board precedent that had been relied upon by employers as they formulated company policies and made decisions about their relationships with employees and the unions representing them. The changes in the law made during this period have been described as “radical.”  These new decisions changed what employers were allowed to put in their employee handbooks, took away employers’ rights to restrict employees’ use of their email systems, and forced employers into joint employer relationships with the independent contractors performing work for them. The union movement was pleased.In 2017, President Trump named Peter B. Robb as the new General Counsel to the Board, replacing the former Obama appointee and beginning the Trump transformation of the Board. The General Counsel has significant responsibilities at the Board, including determining which cases will be prosecuted by the agency, and what theories of law will be advanced. In December 2017, Robb issued a memo to Board offices around the nation, instructing the offices to send certain cases to Washington, D.C. for advice on how they should be handled.In his memo, Robb advised the offices that it was mandatory that they seek his office’s advice on matters involving “cases over the last eight years that overruled precedent,” an undisguised announcement that he intended to undo eight years of Obama-inspired NLRB law.At the same time, as the terms of Obama-appointed members expired, Trump appointed new members to the Board who had a vision different than that of their predecessors.Trump appointees now dominate the Board and are guided by a General Counsel with a clear agenda to undo the work of the Obama Board.  The employer community is excited.Is the Trump Board and its General Counsel living up to employers’ expectations?  As the following sections of this article demonstrate, it would seem so.Employee Handbooks and Work RulesA number of decisions issued by the Obama Board strictly applied a standard developed in 2004 that held that, when judging the legality of provisions of employee handbooks or work rules,  either will be found to be illegal if employees could “reasonably construe” the policy or rule to somehow prevent them from exercising their rights under federal labor law. That very “flexible” definition was taken to its extremes by the Obama-appointed General Counsel at the time. It seemed that almost no handbook or work rule was safe from attack because some employee might “reasonably construe” it to interfere with his or her rights. During that period, many employee handbook policies were found illegal, including, for example, rules that forbade camera-enabled devices such as cell phones on an employer’s property, rules that prohibited criticizing an employer on social media, and rules restricting the making of recordings in the workplace.In December 2017, the new Trump Board issued a decision in The Boeing Company, 365 NLRB No. 154 (2017). Boeing had a long-held policy that prohibited the taking of pictures on its property. The purpose of the policy was to maintain the security of Boeing’s facilities and its proprietary information. Specifically overruling prior decisions, the Trump Board held that it would no longer judge employee handbook rules by the very fluid standard of finding a policy unlawful if an employee could “reasonably construe” a rule as somehow unlawfully restrictive of lawful conduct. In doing so, the Board noted that “over the past decade and one/half, the Board has invalidated a large number of common sense rules and requirements that most people would reasonably expect every employer to maintain.” In Boeing, the Board said that, in the future, it would consider the “nature and extent” of a challenged rule’s “potential impact on [employee legal rights]” and the “legitimate justification associated with the rule.” The Board then laid out three categories the Board would use in future analysis of workplace rules.Boeing makes it possible now for an employer to determine if a rule is legal, without the need to speculate if an employee could “reasonably construe” the rule to be illegal. The Boeing decision brings enormous relief to human resource directors across the nation who had been spending an inordinate amount of time trying to decide if any of its company’s rules were unlawful and litigating over rules that the Board considered a violation of employee rights.Micro UnitsIn another Obama-era decision, the Board held that if a union petitioned for an election among a specific group of employees, no matter how small the group, and those employees shared a “community of interest” among themselves, the Board would let an election proceed in that specific unit unless the employer could prove that other employees, not included in the unit shared an “overwhelming” community of interest with the petitioning group, an almost impossible standard to meet. The harm of allowing these “micro-units” to be formed is that some employees, working for an employer in the same location, sometimes even if they are working with another like group, could be represented by a union and their coworkers would not be represented.  Micro units create divisions in the workplace, undermine retail operations, and limit opportunities for employees who need to move easily across various aspects of an employer’s operations to gain advancement. The Trump Board, in PCC Structurals, Inc.,  365 NLRB No. 160 (2017), ended this foolishness and returned to the traditional community of interest standard that had been the rule during most of the Board’s history. Joint EmployersThe most reviled decision of the Obama Board was its decision in Browning-Ferris, 362 NLRB No. 186 (2015),  which loosened the standard for determining whether two separate employers should be considered “joint employers” and thus share each other’s labor law liability and bargaining obligations to a union.  Under Browning-Ferris, an employer could be considered a joint employer with one of its contractors or franchisees even if it merely had “indirect and unexercised control over the other party.” The traditional standard before Browning-Ferris required that an employer have “direct and immediate” control over the employees of another employer, such as setting the wages, hours, and working conditions of a franchisee’s employees, to be covered as a joint employer. The Obama Board’s revision of the standard to “indirect and unexercised” control put most national fast food chains at risk for liability for the acts and conduct of their franchisees, even those located thousands of miles from corporate headquarters. After a couple of false starts involving issues of whether the Trump Board’s members should hear a particular case that would have served as the vehicle for reversing Browning-Ferris and returning to the traditional standard, the Board decided to change the law through Rule Making, a process of issuing rules governing a certain issue rather than a decision following litigation. Not surprisingly, the Board’s proposed rule returns the law on joint employer to its traditional form.Use of Employer EmailIn Purple Communications, 361 NLRB No. 126 (2014), the Obama Board determined that employees should be allowed to use their private employer’s email system to discuss and further unionization. The U.S. Chamber of Commerce and other business groups argue that the decision takes away an employer’s right to control its own email systems.This issue is currently up for consideration in Caesars Entertainment Corp, 28-CA-060841. The Board has invited the public’s input on this issue and has set an October deadline for comments before it decides the case. Because of recent comments submitted in a footnote to a brief by the General Counsel in another case, it is expected that he will argue to the Board that Purple Communications should be reversed because the decision ignores the facts of the workplace and because there are First Amendment concerns about forcing an employer to pay for speech on its own email systems that it might oppose.More to Come? Of course there is.  There are many other cases and policies viewed by the employer community as improper and disruptive. For example, employers are hoping that the Trump Board will revise a Rule established by the Obama Board that created “quickie” or “ambush” elections,” requiring that elections be held almost immediately after a petition is filed, effectively denying an employer the time necessary to inform its employees of the consequences of unionization. The Board, of course, will wait for cases raising issues to come before it will address other Obama-era decisions.Ever since the Regan Administration there have been reversals of decisions by Democratic and Republican administrations alike. However, nothing before compares to what the Obama Board did and, of course, the Trump Administration is determined to undo much of the Obama Board’s work.

Boomerang: The Trump NLRB Supplants the Obama NLRB

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Boomerang: The Trump NLRB Supplants the Obama NLRB

Boomerang: The Trump NLRB Supplants the Obama NLRB

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When Donald Trump took office in 2017, the members of the NLRB (Board) were predominantly appointees of President Obama.  During the Obama presidency, the Board