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.

Social

Search

Editors

turnbull_andrew_blog_150x150.png

turnbull_andrew_common_640x280.jpg

turnbull_andrew_heroretina_2700x1160.jpg

turnbull_andrew_mobileretina_750x1040.jpg

turnbull_andrew_social_600x600.jpg

Co-Chair, Global Employment and Labor Practice

Partner

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

favicon.ico

favicon-16x16.png

favicon-32x32.png

apple-touch-icon.png

MoFo Favicons

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>.

Welcome to the MoFo ELC Blog

elcblog-header-image.jpg

Welcome to the MoFo ELC Blog

elcblog-header-image

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 legislati

Announcements

Blog - Terms of Use

Blog - Cookies

Blog - Privacy Policy

Blog - Blog Disclaimer

Blog - Attorney Advertising

morrison-foerster-blog-logo.png

Provides insights and reports on the most current class actions lawsuits and product liability issues that affect consumer-facing companies.

Class Dismissed Blog

Class Dismissed

In-depth analysis of developments and trends impacting government contracting.

Government Contract Insights Blog

Government Contract Insights

Looks behind the headlines to explore the trends, identify the opportunities, analyze the issues, and provide guidance for science and technology-based companies.

MoFo Tech Blog

News and thought leadership from lawyers whoa re adding value to the legal profession and the communities we call home.

 MoFo+ Blog

MoFo+

Read our Employment Law Commentary blog for the latest insights in employment and labor law, covering issues from ADA compliance to trade secrets protection.

Employment Law Commentary

MoFo ELC | Latest Employment Law Developments and Commentary

  Linkedin

MoFo LinkedIN

ELC Blog - RSS

Stay Connected

By submitting your data to subscribe to this blog, you approved Morrison & Foerster LLP to email you future information about MoFo news and events. You may opt-out at any time by sending a request to <a href="mailto:mofonews@mofo.com" target="_self">mofonews@mofo.com</a>. To learn more about how Morrison & Foerster LLP uses and protects your personal data, please view our <a href="https://www.mofo.com/about/privacy-policy.html" target="_self">Privacy Policy</a> at <a href="https://www.mofo.com/">www.mofo.com</a>.

Never miss a post from MoFo ELC. Enter your email below to stay up-to-date.

Subscribe

Practical Answers to Employment Law Issues

Morrison Foerster - Footer

Blogs -  Home Button

Home

Blog - Topics

Americans with Disabilities Act (ADA)

Artificial Intelligence

Coronavirus (COVID-19)

Department of Labor (DOL)

Discrimination

EEOC

European Union

Family Medical Leave Act (FMLA)

Immigration

Intellectual Property

Leaves of Absence

Legislation

NLRB

Non-Compete

OFCCP

PAGA

Paid Sick Leave

Pay Equity

Privacy & Data Security

Reductions in force (RIFs)

Trade Secrets

Wage and Hour

Workplace Misconduct

Topics

Blog - Editors

Blog - About

About

Blog - Subscribe

Andrew R. Turnbull

More

Fourth Circuit Stays Injunction of Trump DEI Executive Orders

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

FAR Council Withdraws “Pay Equity and Transparency” Proposed Rule

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

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

LinkedIN

Last year was busy for Biometric Information Privacy Act (BIPA) litigants. Defendants in 2020’s flood of BIPA cases ranged from technology companies developing novel biometric products to amusement parks and healthcare organizations leveraging biometric tools for employee and customer authentication. Even small businesses, such as bakeries and restaurants, found themselves in the crosshairs of BIPA cases. Yet entering the third year after BIPA’s 2018 passage, despite the healthy clip of litigation, open questions remain about the law’s scope and reach. These questions—involving standing, settlement value, and more—were hotly contested in 2020, with no signs of letting up this year.Read our <a href="https://www.mofo.com/resources/insights/210111-bipa-litigation.html" target="_blank">client alert</a>.

Clients seek out Tiffany for her successful track record in defending class action claims on behalf of clients in a broad range of industries, including technology, healthcare, and consumer product companies. She represents numerous Fortune 500 companies in high-stakes litigation involving privacy and marketing claims in courts throughout the United States.

Tiffany Cheung

Clients seek out Tiffany for her successful track record in defending class action claims on behalf of clients in a broad range of industries, including technology, healthcare, and consumer product companies. She represents numerous Fortune 500 companies in high-stakes litigation involving privacy and marketing claims in courts throughout the United States.

Associate

Camille Framroze is an associate in the Litigation Department of Morrison Foerster’s San Francisco office. Her practice encompasses a broad range of complex litigation, with a focus on commercial li

Camille Framroze

200403-litigation-tile-promo.jpg

Privacy Litigation 2020 Year in Review: BIPA Litigation

Privacy Litigation 2020 Year in Review: BIPA Litigation

200403-litigation-tile-promo

Last year was busy for Biometric Information Privacy Act (BIPA) litigants. Defendants in 2020’s flood of BIPA cases ranged from technology companies developing 

With the New Year rapidly approaching, employers should prepare for the flurry of new California employment legislation. The recent legislation presents new compliance challenges and requirements for California employers, including obligations related to the ongoing pandemic, reinforcing or expanding leave protections, wage and hour compliance risks, and much more. We discuss some of the most notable developments below. Employers should review their policies and procedures in light of these developments.<h4>COVID-19</h4>AB 685 imposes new COVID-19-related notification and reporting obligations and authorizes Cal/OSHA to shut down operations that place workers at risk of exposure.Effective January 1, 2021, AB 685 requires employers that receive a “notice of potential exposure” (which may come from a variety of sources, as discussed below) to COVID-19 to take the following actions within one business day of the notice:<ol><li> Provide written notice to all employees, and the employers of subcontracted employees, who were at the same worksite as a “qualifying individual” within the “infectious period” that they may have been potentially exposed to COVID-19. If the employees are unionized, written notice must also be provided to the exclusive representative of the employees. The “infectious period” is currently at or around 10 days, depending on whether the individual actually develops symptoms. The State Department of Public Health will be responsible for determining the length of the “infectious period.”<a href="file:///C:/Users/btk1/AppData/Roaming/OpenText/DM/Temp/SAN_FRANCISCO-%234379514-v7-ELC_re__California_Legislation.docx#_ftn1">[1]</a></li><li>Provide all employees who may have been exposed (and their exclusive representative, if any,) with information regarding COVID-19-related benefits to which the employees may be entitled under applicable federal, state, or local laws, including, but not limited to, workers’ compensation, COVID-19-related leave, company sick leave, state-mandated leave, supplemental sick leave, or negotiated leave provisions, as well as anti-retaliation and anti-discrimination protections.</li><li> Notify all employees, and the employers of subcontracted employees (and their exclusive representative, if any) of the disinfection and safety plan that the employer plans to implement and complete, which must be consistent with the guidelines of the federal Centers for Disease Control.</li></ol>A “qualifying individual” includes someone who has a positive test for COVID-19, is diagnosed with COVID-19 by a licensed health care provider, is ordered to isolate for COVID-19 by a public health official, or dies due to COVID-19, as determined by a public health department. The “notice of potential exposure” may come from a variety of sources, including a public health official or licensed medical practitioner, a qualifying individual’s representative or emergency contact, the employer’s own testing protocol, or a subcontracted employer.AB 685 also requires employers with a COVID-19 “outbreak” within its premises to notify, within 48 hours, the local public health agency of the names, number, occupation, and worksite of the employees who meet the definition of a “qualifying individual” under AB 685. The term “outbreak” is to be defined by the State Department of Public Health, which currently defines “outbreak” as “at least three COVID-19 cases among workers at the same worksite within a 14-day period.”AB 685 also provides that employers should not disclose employees’ “medical information unless otherwise required by law” or “retaliate against a worker for disclosing a positive COVID-19 test or diagnosis or order to quarantine or isolate.”From January 1, 2021, until January 1, 2023, AB 685 authorizes Cal/OSHA to shut down an entire worksite or a specific worksite area that exposes employees to an imminent hazard related to COVID-19. An imminent hazard is defined as any condition or practice that poses a hazard to employees, which could reasonably be expected to cause death or physical harm immediately or before the imminence of such hazard can be eliminated through Cal/OSHA’s enforcement process. Any shutdown order must not “materially interrupt the performance of critical governmental functions essential to ensuring public health and safety functions or the delivery of electrical power or water.” From January 1, 2021, until January 1, 2023, Cal/OSHA can also issue citations to employers for serious violations related to COVID-19 without providing 15-day advance notice. AB 1867 provides supplemental COVID-19 paid sick leave to employees.Effective September 19, 2020, AB 1867 provides supplemental paid sick leave until the later of December 31, 2020, or the expiration of any federal extension of the Emergency Paid Sick Leave Act. AB 1867 applies to private employers with more than 500 or more employees and certain employers who employ health care providers or emergency responders or operate a food facility. It requires these employers to provide supplemental COVID-19 paid sick leave to employees who are unable to work due to: (1) COVID-19-related federal, state, or local quarantine or isolation orders; (2) self-quarantine or isolation order by health care provider due to COVID-19-related concerns; or (3) their employer barring them from the worksite due to health concerns related to COVID-19.AB 1867 provides 80 hours of supplemental COVID-19 paid sick leave to an employee whom the employer considers “full time” or has worked or was scheduled to work, on average, at least 40 hours per week in the two weeks preceding the date the employee took COVID-19 supplemental paid sick leave. If the employee is not “full-time,” the employee’s supplemental paid sick leave is based on his or her normal schedule over the prior two weeks. The employer is not required to pay more than $511 per day or more than $5,110 in the aggregate to an employee for COVID-19 supplemental paid sick leave.SB 1159 makes injury from COVID-19 presumptively compensable under workers’ compensation law.For an employee who tested positive or was diagnosed with COVID-19 within 14 days after a day that the employee worked at a worksite at the employer’s direction, SB 1159 provides a rebuttal presumption that the employee’s COVID-19-related illness is an occupational injury that is eligible for workers’ compensation benefits. SB 1159 is effective through January 1, 2023.<h4>Protected Leave</h4>SB 1383 significantly expands California Family Rights Act rights for employees of small businesses.The California Family Rights Act (“CFRA”) authorizes eligible employees to take up to 12 weeks of unpaid, job-protected family and medical leave in a 12-month period. Currently, the CFRA applies to private employers with 50 or more employees within 75 miles of the employer’s worksite. Effective January 1, 2021, SB 1383 expands the CFRA to employers with five or more employees and eliminates the 75 mile requirement.SB 1383 also expands the types of leave that can be used under CFRA. CFRA currently allows employees to take leave to care for a “family member” who has a serious health condition. “Family member” is currently defined as a minor child, a spouse, or a parent. SB 1383 expands the definition to include adult children, siblings, grandparents, grandchildren, and domestic partners. SB 1383 additionally eliminates the CFRA restriction that allows an employer employing both parents of a child to limit CFRA leave to a total of 12 weeks for both parents due to bonding with a newborn child, adopting a child, or foster care placement. Moreover, SB 1383 eliminates the “key employee” exemption, allowing an employer to deny reinstatement to an employee who takes CFRA leave if the employee is among the highest paid 10% of the employer’s employees and the denial is necessary to prevent “substantial and grievous economic injury” to the employer.<ul><li>AB 2017 amends section 233 of the California Labor Code by providing employees with the “sole discretion” to designate the type of paid sick leave used. Currently, employers must permit an employee to use half of the employee’s sick leave entitlement to attend to the illness of a family member. Effective January 1, 2021, AB 2017 will prevent employers from incorrectly designating an employee’s sick leave as kin care and unintentionally depleting the number of hours an employee has to take leave when caring for a family member.</li></ul><ul><li>AB 2992 expands protections under sections 230 and 230.1 of the California Labor Code. Currently, those laws require employers to provide protected leave for employees who are victims of domestic violence, sexual assault, or stalking. Starting January 1, 2021, AB 2992 will expand the protected leave to employees who are victims “of a crime that caused physical injury or that caused mental injury and a threat of physical injury.”</li></ul><h4>Independent Contractors</h4>AB 2257 and AB 323 exempt more California workers from the ABC test under AB 5. As we <a href="https://elc.mofo.com/topics/California-Issues-A-New-Round-Of-Employment-Laws.html">reported</a>, AB 5 codified the expansive ABC test under the California Supreme Court’s Dynamex decision for purposes of determining whether a worker was misclassified as an independent contractor. AB 5 exempted numerous occupations from the ABC test.After challenges from various industries and professions, the California legislature passed AB 2257 and AB 323 to expand the number of exemptions under AB 5. For example, AB 2257 creates a new “single-engagement” business-to-business exemption from the ABC test for a “stand-alone non-recurring event in a single location, or a series of events in the same location no more than once a week” (e.g., an indie music band performing at a non-recurring event). Additional requirements must still be met for this exemption to apply, including that neither party is subject to the control and direction of the other, each party has the ability to negotiate its own rates, each party maintains its own business location, and each party provides its own tools, vehicles, and equipment to perform services under the parties’ contract.AB 2257 also creates new entertainment industry exemptions from the ABC test, including: (1) recording artists; (2) songwriters, lyricists, composers, and proofers; (3) managers of recording artists; (4) record producers and directors; (5) musical engineers and mixers engaged in the creation of sound recordings; (6) musicians engaged in the creation of sound records; (7) vocalists; (8) photographers working on recording photo shoots, album covers, and other items for press and publicity purposes; (9) independent radio promoters; and (10) any other individual “engaged to render any creative, production, marketing, or independent music publicist services related primarily to the creation, marketing, promotion, or distribution of sound recordings or musical compositions.” Musicians and vocalists who are not royalty-based participants in the work created during any specific engagement will be considered employees. Additional exemptions include, but are not limited to, licensed landscape architects, specialized performers teaching master classes, registered professional foresters, real estate appraisers and home inspectors, and feedback aggregators. Referral agencies for a non-exhaustive list of occupations such as caddies, photographers, and interpreters were also exempted from AB 5.AB 323, dubbed the “Save Local Journalism Act,” provides for a one-year extension until January 1, 2022, of the exemption of newspaper distributors and publishers from the ABC test.In addition, California voters recently approved an additional exemption to AB 5, Proposition 22, a California ballot that provides for classification of drivers who offer their services through app-based platforms as independent contractors.  Adoption of Proposition 22 shows that it is indeed possible, albeit expensive, for industry and professional groups to make their case for AB 5 exemption directly to voters.<h4>EEO Reporting</h4>SB 973 requires California private employers with 100 or more employees to submit pay data for its workforce to the Department of Fair Employment and Housing (“DFEH”) on an annual basis. The first submission deadline is March 31, 2021. The pay data must include information about the number of employees by race, ethnicity, and sex in the following categories: (1) executive or senior level officials and managers; (2) first or mid-level officials and managers; (3) professionals; (4) technicians; (5) sales workers; (6) administrative support workers; (7) craft workers; (8) operatives; (9) laborers and helpers; and (10) service workers. Employers must also provide previous year W-2 earnings and hours worked for all employees in a searchable and sortable format.<h4>DLSE Complaints and Whistleblowers</h4>Starting January 1, 2021, AB 1947 expands the statute of limitations from six months to one year to bring a complaint with the Division of Labor Standards Enforcement (“DFEH”) for any employee who believes that he or she was discharged or otherwise discriminated against in violation of any law enforced by the Labor Commissioner. AB 1947 also amends Labor Code section 1102.5, which provides whistleblower protections, to allow a court to award reasonable attorney’s fees to a prevailing plaintiff.<h4>No-Rehire Clauses in Settlement Agreements</h4>We <a href="https://elc.mofo.com/topics/California-Issues-A-New-Round-Of-Employment-Laws.html">reported</a> last year that AB 749 prohibited no-rehire provisions in settlement agreements with employees who filed a claim against an employer in court, before an administrative agency, in an alternative dispute resolution forum, or through the employer’s internal complaint process. One notable exception to AB 749 was where the employer had made a good faith determination that the employee engaged in sexual harassment or assault or “if there is a legitimate non‑discriminatory or non-retaliatory reason for terminating the employment relationship or refusing to rehire the person.” AB 2143, effective January 1, 2021, expands the no-rehire clause prohibition exception to include good-faith determination that the employee engaged in criminal conduct. AB 2143 was also amended to require employees to make “good faith” complaints to qualify for the no-rehire clause protection.<h4>Corporate Board Composition</h4>AB 979 requires publicly held companies whose principal executive office is located in California to have a minimum of one director from an underrepresented community by the end of 2021. For companies with more than four but fewer than nine directors, AB 979 requires a minimum of two directors from underrepresented communities by the close of 2022. For companies with nine or more directors, AB 979 requires a minimum of three directors from underrepresented communities by the end of 2022. “Director from an underrepresented community” is defined as an “individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.” A company is subject to a fine of $100,000 for a first violation of AB 979 and $300,000 for a second or subsequent violation. Similar to SB 826, which contains similar provisions for companies to have a minimum number of female directors, AB 979 may be subject to various legal challenges.<h4>Wage and Hour Enforcement</h4>AB 3075 requires a company, when filing the company’s statement of information with the California Secretary of State, to include information about whether any officer, director, member, or manager of the company has an outstanding final judgment issued by the DFEH or a court of law, for which no appeal is pending, for the violation of any wage order or provision of the Labor Code.AB 3075 also lowers the bar for an employee to establish successor liability for “any wages, damages, and penalties owed to any of the judgment debtor’s former workforce.” Under AB 3075, successorship may be established if any of the following criteria are established: (1) company uses substantially the same facilities or substantially the same workforce to offer substantially the same services as the judgment debtor; (2) company has substantially the same owners or managers that control the labor relations as the judgment debtor; (3) company employs as a managing agent any person who directly controlled the wages, hours, or working conditions of the affected workforce of the judgment debtor; or (4) company operates a business in the same industry and the business has an owner, partner, officer, or director who is an immediate family member of any owner, partner, officer, or director of the judgment debtor. While legislative history suggests that AB 3075 was introduced to prevent businesses from closing their operations and starting new ones to avoid liability for payments to employees, AB 3075’s language appears to go beyond this narrow scenario and potentially apply, for example, to a third-party company engaged in an asset purchase. <a href="file:///C:/Users/btk1/AppData/Roaming/OpenText/DM/Temp/SAN_FRANCISCO-%234379514-v7-ELC_re__California_Legislation.docx#_ftnref1">[1]</a> See the State Department of Public Health’s website for the latest guidance on this topic: <a href="https://www.cdph.ca.gov/Programs/CID/DCDC/Pages/COVID-19/Employer-Guidance-on-AB-685-Definitions.aspx">https://www.cdph.ca.gov/Programs/CID/DCDC/Pages/COVID-19/Employer-Guidance-on-AB-685-Definitions.aspx</a>.

aubry_lloyd_blog_150x150.png

aubry_lloyd_common_640x280.jpg

aubry_lloyd_heroretina_2700x1160.jpg

aubry_lloyd_mobileretina_750x1040.jpg

aubry_lloyd_social_600x600.jpg

Of Counsel

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.

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.

employment-law-blog-promo-tile.jpg

Another Round of New California Employment Laws

employment-law-blog-promo-tile1.jpg

employment-law-blog-promo-tile

With the New Year rapidly approaching, employers should prepare for the flurry of new California employment legislation. The recent legislation presents new com

Another Round of New California Employment Laws

On July 27, 2020, Senate Republicans introduced the HEALS Act, its response to the Democrat-backed stimulus bill, the HEROES Act. Although the HEALS Act is currently on life support in light of the stalemate in negotiations over the competing bills, employers should nonetheless take notice of one lesser publicized piece of the Senate’s proposed stimulus package: the SAFE TO WORK Act (the “Act”). The Act would create a liability shield (with retroactive effect) for employers and others “to discourage insubstantial lawsuits relating to COVID-19 while preserving the ability of individuals and businesses that have suffered real injury to obtain complete relief.”Read our <a target="_blank" href="https://www.mofo.com/resources/insights/200811-safe-to-work-act.html">client alert.</a>

covid_02_28_elc_blog_600px_v2-300x200.jpg

The SAFE TO WORK Act: An In-Depth Guide for Employers to the Senate's Proposed Coronavirus Liability Shield

Virginia Becomes the First State to Adopt COVID-19 Workplace Safety Mandates

covid_02_28_elc_blog_600px_v2-300x200

On July 27, 2020, Senate Republicans introduced the HEALS Act, its response to the Democrat-backed stimulus bill, the HEROES Act. Although the HEALS Act is curr

The SAFE TO WORK Act: An In-Depth Guide for Employers to the Senate's Proposed Coronavirus Liability Shield

This week, on August 3, 2020, the California Supreme Court issued its opinion in Ixchel Pharma, LLC v. Biogen, Inc., which resolved two questions regarding the standards to be applied for non-competition agreements and disputes between businesses in California. The first was whether a plaintiff in a dispute between businesses is required to plead an independently wrongful act in order to establish a claim for tortious interference with a contract that is terminable at-will, to which the court responded, yes. The second question, was what is the proper standard for determining whether California Business and Professions Code section 16600 (Section 16600) voids a non-competition agreement between two businesses, to which the court responded, the Rule of Reason.Read the <a href="https://www.mofo.com/resources/insights/200807-california-supreme-court.html" target="_blank">full client alert</a>.

Eric Tate

California Supreme Court Clarifies Standards for B2B Non-Competition Agreements and Disputes in California

This week, on August 3, 2020, the California Supreme Court issued its opinion in Ixchel Pharma, LLC v. Biogen, Inc., which resolved two questions regarding the 

California Supreme Court Clarifies Standards for B2B Non-Competition Agreements and Disputes in California

On August 3, 2020, President Trump signed an Executive Order aimed at limiting the use of foreign workers on federal contracts and subcontracts. The issuance of the Executive Order comes on the heels of the Tennessee Valley Authority, a federally owned utility, announcing plans to outsource 20% of its technology jobs overseas.Read more on <a href="https://govcon.mofo.com/labor-employment/executive-order-seeks-to-limit-the-use-of-foreign-workers-on-federal-contracts/" target="_blank">MoFo's Government Contracts Insights Blog</a>.Morrison & Foerster associate Victoria Dalcourt Angle contributed to the writing of this post.

angle_victoria_blog_150x150.png

angle_victoria_common_640x280.jpg

angle_victoria_heroretina_2700x1160.jpg

angle_victoria_mobileretina_750x1040.jpg

angle_victoria_social_600x600.jpg

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

Victoria Dalcourt Angle

Victoria Angle

employmentlawbookgavel_gettyimages-180810589_small.jpg

Executive Order Seeks to Limit the Use of Foreign Workers on Federal Contracts

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

180810589

On August 3, 2020, President Trump signed an Executive Order aimed at limiting the use of foreign workers on federal contracts and subcontracts. The issuance of

Executive Order Seeks to Limit the Use of Foreign Workers on Federal Contracts

On March 28, 2020, the United States Department of Labor (“DOL”) published additional guidance on nearly two dozen more “critical issues” that the DOL had not addressed in its previous guidance on the recently enacted <a target="_blank" href="https://www.congress.gov/bill/116th-congress/house-bill/6201/text">Families First Coronavirus Response Act</a> (“FFCRA”). Our March 26, 2020 report on the notable takeaways from the previous guidance can be <a target="_blank" href="https://elc.mofo.com/topics/dol-releases-first-round-of-published-guidance-on-the-families-first-coronavirus-response-act.html">found here</a>. In addition to providing a few clarifications on the previous guidance, the <a target="_blank" href="https://www.dol.gov/agencies/whd/pandemic/ffcra-questions">latest round of guidance</a> is notable for discussing the definition of a “health care provider” and “emergency responder” who may be excluded from coverage under the FFCRA. The DOL also further defines the scope of the small business exemption for purposes of exclusion from the provisions of the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act. The guidance also addresses whether public sector employees may take paid family and medical leave. The DOL indicated that it will continue to add guidance as these benefits go into effect on April 1, 2020.Here are a few highlights of the DOL’s updated guidance on the FFCRA:Required records for FFRCA paid leave.<a href="https://elc.mofo.com/topics/dol-releases-first-round-of-published-guidance-on-the-families-first-coronavirus-response-act.html">Our last post</a> on the DOL guidance detailed the “appropriate documentation” employers must maintain to obtain a tax credit for providing paid leave under the FFCRA. The most recent iteration of the DOL guidance relaxed that requirement, stating only that employers “should retain appropriate documentation in your records” and directing employers to consult with the Internal Revenue Service for further guidance. The DOL also added that employers are not required to provide leave if the employee has not provided materials “sufficient to support the applicable tax credit.”Similarly, employers may require employees who are taking expanded family and medical leave to provide additional documentation in support of their leave, in accordance with the current certification rules for conventional Family and Medical Leave Act (“FMLA”) leave requests.   Amount of tax credits allowed.The DOL clarified that if an employer chooses to supplement or adjust the pay mandated under the FFCRA with paid leave the employer already provided under its paid leave policy, the employer is not entitled to a tax credit for any paid sick leave or expanded family and medical leave that is not required to be paid under the FFCRA or for the amount that exceeds the limits set forth under the FFCRA.Small business exemptions under the FFCRA.For the purposes of the FFCRA, the DOL defines a small business as an employer (including a religious or nonprofit organization) with fewer than 50 employees. A small business is exempt from providing (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical leave due to school or place of care closures or child care provider unavailability for COVID-19 reasons when doing so would jeopardize the viability of the small business as a going concern. One of the following three conditions must be met for the small business to claim this exemption:<ol><li>The provision of paid sick leave or expanded family and medical leave would result in the small business’ expenses and financial operations exceeding available business revenues and cause the small business to cease operating at a minimal capacity; </li> <li>The absence of the employee requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of the employee’s specialized skills, knowledge of the business, or responsibilities; or </li> <li>There are not sufficient able, willing, and qualified workers who will be available at the time and place needed to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.</li></ol>Counting employees to determine coverage under the FFCRA.Employers should use the number of employees on the day the employee’s leave would start to determine whether the employer has fewer than 500 employees for purposes of providing expanded family and medical leave and paid sick leave. The language found in the FMLA’s definition for employer does not apply to the Emergency Family and Medical Leave Expansion Act for purposes of expanded family and medical leave. COVID-19 related leave after already using FMLA leave.An eligible employee is entitled to take paid sick leave under the Emergency Paid Sick Leave Act regardless of how much leave the employee may have previously taken under the FMLA. Moreover, this paid sick leave is in addition to other leave provided under federal, state, or local law; an applicable collective bargaining agreement; or the employer’s existing company policy.If the employer was covered by the FMLA prior to April 1, 2020, the employee’s eligibility for expanded family and medical leave depends on how much FMLA leave he or she has already taken during the applicable 12-month period. During a 12-month period, employees may take only a combined total of 12 workweeks of FMLA leave for traditional FMLA-qualifying reasons and for child care as provided under the Emergency Family and Medical Leave Expansion Act. An employee who has already taken 12 workweeks of FMLA leave during the applicable 12-month period prior to requesting expanded family and medical leave will not be entitled to expanded family and medical leave during that 12-month period. If the employee takes paid sick leave concurrently with the first two weeks of expanded family and medical leave, which may otherwise be unpaid, those two weeks count toward the 12 workweeks in the 12-month period. This analysis does not apply if the employer first becomes covered under the FMLA on April 1, 2020. Definition of a “health care provider.”The new guidance defines a “health care provider” who is not entitled to paid sick leave and/or expanded family and medical leave under the FFCRA, as any employee employed at any:<ul><li>doctor’s office, hospital, health care center, or clinic;</li></ul><ul><li>post-secondary educational institution offering health care instruction;</li></ul><ul><li>medical school;</li></ul><ul><li>local health department or agency;</li></ul><ul><li>nursing or retirement facility or home; </li></ul><ul><li>home health care provider;</li></ul><ul><li>any facility that performs laboratory or medical testing; </li></ul><ul><li>pharmacy; or </li></ul><ul><li>any similar institution, employer or entity, permanent or temporary.</li></ul>This definition of a “health care provider” includes any individuals employed by an entity that contracts with the above institutions, employers, or entities to provide services or to maintain the operation of the facility, such as anyone employed by an entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments. To minimize the spread of COVID-19, the DOL encourages employers to be “judicious” when using this definition to exempt health care providers from provisions of the FFCRA.Definition of “emergency responder.”An emergency responder who may be excluded from paid sick leave or expanded family and medical leave by his or her employer under the FFCRA, is an employee who is necessary for the provision of transport, care, health care, comfort, and nutrition of such patients, or whose services are otherwise needed to limit the spread of COVID-19. This category includes, but is not limited to: military or national guard, law enforcement officers, correctional institution personnel, fire fighters, emergency medical services personnel, physicians, nurses, public health personnel, emergency medical technicians, paramedics, emergency management personnel, 911 operators, public works personnel, and persons with skills or training in operating specialized equipment or other skills needed to provide aid in a declared emergency as well as individuals who work for such facilities employing these individuals and whose work is necessary to maintain the operation of the facility.As with employers of “health care providers,” the DOL also encourages employers of “emergency responders” to be judicious when exempting their employees from the provisions of the FFCRA.Public sector employees’ right to take sick leave under the FFCRA.Paid sick leave under the Emergency Paid Sick Leave Act: The DOL states that public sector employees are generally entitled to paid sick leave if they work for a public agency or other unit of government unless the employee is a health care provider or emergency responder.Paid family and medical leave under the Emergency Family and Medical Leave Expansion Act: The DOL states that if the employee is a federal employee, he or she is not likely entitled to expanded family and medical leave, as the Emergency Family and Medical Leave Expansion Act only amended Title I of the FMLA (federal employees are typically covered by Title II of the FMLA). Likewise, if the public sector employee is a health care provider or emergency responder, he or she may be excluded by the employer from being able to take expanded family and medical leave under the FFCRA.We will continue to monitor the situation as we await the DOL’s additional guidance and official regulations. As the situation continues to rapidly evolve, please keep checking our <a href="https://elc.mofo.com/" target="_blank">blog</a> for employment-related developments.

200302-coronovirus-covid-19-promo.jpg

DOL Issues Newly Updated Guidance on Critical Issues for Employers Regarding the Families First Coronavirus Response Act

Practical Considerations for Requiring Employees to Report to Work in Light of COVID-19 Stay-at-Home Orders

200302-coronovirus-covid-19-promo

On March 28, 2020, the United States Department of Labor (“DOL”) published additional guidance on nearly two dozen more “critical issues” that the DOL had not a

DOL Issues Newly Updated Guidance on Critical Issues for Employers Regarding the Families First Coronavirus Response Act

As businesses and employers parse the 880-page Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which President Trump signed into law on March 27, 2020, we offer this analysis of the unemployment compensation provisions in the Act. This Employment Law Commentary is part of a series addressing the employment-related provisions of the CARES Act.The CARES Act builds on and partially modifies the Families First Coronavirus Response Act (“FFCRA”) enacted on March 18, 2020. As we described in our <a href="https://elc.mofo.com/topics/families-first-coronavirus-response-act-paid-family-sick-leave.html" target="_blank">Employment Law Commentary analyzing the FFCRA</a>, the FFCRA provides $1 billion in emergency grants for unemployment programs and auxiliary measures, like easing work search requirements and eliminating waiting time requirements for individuals to receive unemployment compensation.The CARES Act goes much further, with three game-changing unemployment insurance components:(1) Pandemic Unemployment Assistance, which allows states to extend unemployment benefits through December 31, 2020, to self-employed individuals, gig-economy workers, independent contractors, and others who would not be eligible otherwise; (2) Pandemic Unemployment Compensation, which provides people receiving unemployment benefits through their state programs with an additional $600 weekly benefit until July 31, 2020; and (3) Pandemic Emergency Unemployment Compensation, which allows states to provide an additional 13 weeks of unemployment assistance to workers who are unemployed due to COVID-19. The CARES Act also gives states $100 million to support work sharing programs that allow employees to receive unemployment benefits when their employers reduce their hours and wages in lieu of layoffs.The federal government will cover not only the entire cost of these measures—allocating substantial sums to do so—but will also cover the administrative costs associated with implementing these measures.Pandemic Unemployment AssistanceThe Pandemic Unemployment Assistance provision may be the most groundbreaking unemployment insurance provision in the CARES Act. This provision extends unemployment benefits to “covered individuals” who are not ordinarily eligible for unemployment benefits, such as self-employed people, gig-economy workers, independent contractors, and people who have exhausted their regular unemployment benefits. “Covered individuals,” for purposes of Pandemic Unemployment Assistance are people who are both (1) not otherwise eligible for regular unemployment compensation under state or federal law and (2) able to self-certify that they are otherwise able to work and available for work except that they are unemployed, partially unemployed, or unable or unavailable to work because:<ul><li>The individual has been diagnosed with COVID-19 or is experiencing symptoms of COVID-19 and seeking a medical diagnosis; </li></ul><ul><li>A member of the individual’s household has been diagnosed with COVID-19; </li></ul><ul><li>The individual is providing care for a family member or a member of the individual’s household who has been diagnosed with COVID-19; </li></ul><ul><li>A child or other person in the household for which the individual has primary caregiving responsibility is unable to attend school or another facility that is closed as a direct result of the COVID-19 public health emergency and such school or facility care is required for the individual to work; </li></ul><ul><li>The individual is unable to reach the place of employment because of a quarantine imposed as a direct result of the COVID-19 public health emergency; </li></ul><ul><li>The individual is unable to reach the place of employment because the individual has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; </li></ul><ul><li>The individual was scheduled to commence employment and does not have a job or is unable to reach the job as a direct result of the COVID-19 public health emergency; </li></ul><ul><li>The individual has become the breadwinner or major support for a household because the head of the household has died as a direct result of COVID-19; </li></ul><ul><li>The individual has to quit his or her job as a direct result of COVID-19; </li></ul><ul><li>The individual’s place of employment is closed as a direct result of the COVID-19 public health emergency; or</li></ul><ul><li>The individual meets any additional criteria established by the Secretary of Labor for unemployment assistance.</li></ul>Employees who can telework and who otherwise are receiving paid sick leave or other paid leave are not eligible for Pandemic Unemployment Assistance. Covered individuals are eligible to receive the regular benefits they would have received if eligible under state law, plus the additional $600 per week benefit that is available to all unemployed workers under the Pandemic Unemployment Compensation provision described below. This program applies to the period beginning on or after January 27, 2020 and will be in effect until December 31, 2020. The Act also waives the usual one-week waiting period to receive benefits. Significantly, the federal government will reimburse the states the entire cost of providing these benefits.Pandemic Unemployment CompensationThe CARES Act’s Pandemic Unemployment Assistance provision increases state law unemployment benefits by an additional $600 per week until July 31, 2020, provided the state agrees to participate in the program. The $600 federal benefit will be paid across the board, regardless of the recipient’s income. Thus, unemployed people can conceivably receive more in unemployment benefits than they earned before they became unemployed. The Act also contains measures to prevent states from trying to deduct or offset the federal payment from other types of benefits. For example, states receiving funds to distribute Pandemic Unemployment Compensation may not reduce “the amount determined under the State law” nor factor in additional compensation received by individuals through Medicaid or the Children’s Health Insurance Program. This program applies to the period starting from the date upon which a state government enters into an agreement to receive the relevant funds from the federal government.Pandemic Emergency Unemployment CompensationThe CARES Act will also allow participating states to provide up to 13 weeks (until December 31, 2020) of unemployment benefits to individuals who: (1) have already exhausted their unemployment compensation benefits (i.e., the individual has received the maximum available under a state’s unemployment compensation laws or the individual’s right to unemployment compensation has expired); (2) do not currently qualify; and (3) are simply “able to work, available to work, and actively seeking work.” The benefit amounts will be the same as those available to individuals eligible for Pandemic Unemployment Assistance and Pandemic Unemployment Compensation (i.e., their regular weekly benefit, plus $600 increase). This program applies to the period starting from the date upon which a state government enters into an agreement to receive the relevant funds from the federal government.More information regarding the CARES Act is available from our Coronavirus (COVID-19) Resource Center, where we discuss the CARES Act’s <a target="_blank" href="https://www.mofo.com/resources/insights/200327-overview-cares-act-loan-programs.html">loan programs to provide liquidity to businesses</a> (as well as <a target="_blank" href="https://www.mofo.com/resources/insights/200327-cares-sba-loan-eligibility-process.html">eligibility and application processes for these</a>); the CARES Act’s <a target="_blank" href="https://www.mofo.com/resources/insights/200330-bankruptcy-relief-cares-act.html">bankruptcy relief measures</a> and <a target="_blank" href="https://www.mofo.com/resources/insights/200330-cares-act-enacted.html">financial services provisions</a>; how the CARES Act <a target="_blank" href="https://www.mofo.com/resources/insights/200327-corona-air-relief-act.html">imposes limitations on employee compensation for businesses receiving aid</a>; the CARES Act <a target="_blank" href="https://www.mofo.com/resources/insights/200327-coronavirus-covid-19-cares-act.html">specific tax relief provided for individuals and businesses</a>; and, finally, the CARES Act’s <a target="_blank" href="https://www.mofo.com/resources/insights/200327-contractor-relief-cares-act.html">impact on federal contractors</a>.

CARES Act – What Employers Should Know (Part II): Unemployment Insurance Benefits

As businesses and employers parse the 880-page Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which President Trump signed into law on Ma

CARES Act – What Employers Should Know (Part II): Unemployment Insurance Benefits

tate_eric_blog_150x150.png

tate_eric_common_640x280.jpg

tate_eric_heroretina_2700x1160.jpg

tate_eric_mobileretina_750x1040.jpg

tate_eric_social_600x600.jpg

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.

elcblog-employment-trends.jpg

Employment Law Trends to Watch in 2020

elcblog-employment-trends

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

Employment Law Trends to Watch in 2020

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

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

shutterstock_1149525053_small1.jpg

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

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

shutterstock_1149525053_small.jpg

shutterstock_1149525053_small

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

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

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

shutterstock_1328656895_small1.jpg

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

shutterstock_1328656895_small.jpg

shutterstock_1328656895_small

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