Author: Megan Shaked

California Supreme Court Concludes Third Party Agents May Be Directly Liable for Discrimination under FEHA

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By Megan Shaked

This week the California Supreme Court in Raines v. U.S. Healthworks Medical Group decided that an employer’s business entity agents can be held directly liable under the California Fair Employment and Housing Act (FEHA) for employment discrimination in “appropriate circumstances when the business-entity agent has at least five employees and carries out FEHA-regulated activities on behalf of an employer.”

The Underlying Class Action For Unlawful Medical Inquiries

The FEHA prohibits employers from making any medical or psychological inquiry of an applicant, except under certain circumstances. The plaintiffs in the underlying class action alleged Continue reading →

NLRB Issues Ruling Prohibiting Non-Disparagement and Confidentiality Provisions in Severance Agreements

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By Megan S. Shaked

Over the last few years, we have seen states enact various restrictions on confidentiality and nondisparagement clauses in employment agreements. These changes were made in the wake of the #MeToo movement and in an effort to reduce perceived barriers to workers’ ability to raise claims for unlawful conduct in the workplace.

Last week, the National Labor Relations Board (NLRB) ruled that a severance agreement containing nondisparagement and confidentiality provisions is unlawful under the National Labor Relations Act (NLRA).

The main issue was whether the employer violated the NLRA by offering a severance agreement to 11 bargaining unit employees it permanently furloughed. The agreement broadly prohibited the employees from making statements that could disparage the employer. The agreement also prohibited the employees from disclosing the terms of the agreement.

In examining the language of the severance agreement at issue, the Board ultimately concluded that the nondisparagement and confidentiality provisions “interfere with, restrain, or coerce employees’ exercise of Section 7 rights.” The Board reasoned that because the agreement conditioned the receipt of severance benefits on the employee’s acceptance of the unlawful provisions, the respondent’s proffer of the agreement violated the NLRA.

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California Rings in 2023 with New Employment Laws

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By Andrew J. Sommer, Fred Walter, Megan S. Shaked, and Samuel S. Rose

This year, Governor Newsom has signed into law employment bills on disparate subjects such as pay equity, cannabis use, and leaves of absence.  These new laws also concern industry-specific mandates for wage and hour compliance and human trafficking avoidance. These new laws take effect on January 1, 2023, unless otherwise noted.

New Pay Equity Law Requiring Disclosure of Employee Pay Scales

Senate Bill (SB) 1162 amends the existing requirement for private employers with 100 or more employees to submit pay data reports to the California Civil Rights Department. The employer pay data reports are now due by the second Wednesday of May 2023, and the second Wednesday of May for each year thereafter. SB 1162 also requires private employers with 100 or more employees hired through labor contractors to submit, by the second Wednesday of May, a separate pay data report to the Civil Rights Department for those employees.

These pay data reports must now include the median and mean hourly rate for each combination of race, ethnicity, and sex within each enumerated job category (for example, executive/senior level officials/managers, professionals, administrative support workers, service workers, etc.). Employers with multiple establishments need not submit a consolidated report, as previously required. Importantly, employers can no longer submit an EEO-1 in lieu of a pay data report.

This law also adds a requirement that Continue reading →

California Courts Issue Reminder of Strict Requirement to Pay Arbitration Fees on Time

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By Megan Shaked

At the beginning of 2022, two sections were added to the California Arbitration Act specifying that a failure to timely pay arbitration fees constitutes a material breach of the arbitration agreement. In the event of a material breach, a party subject to arbitration can withdraw the claims from arbitration to proceed in court and seek other sanctions. Concept,For,Corruption,,Bankruptcy,Court,,Bail,,Crime,,Bribing,,Fraud,,AuctionLast month, the California Court of Appeal in De Leon v. Juanita’s Foods confirmed that the new law is a bright-line rule and that courts do not have discretion to deviate from a finding of material breach.

California Civil Procedure Code Sections 1281.97 and 1281.98 require employers seeking to compel an employee’s dispute into arbitration to timely pay the fees or costs to initiate and to continue arbitration proceedings. If the employer does not pay the fees/costs required within 30 days after the due date, the employer is in material breach of the arbitration agreement, is in default of the arbitration agreement, and waives its right to compel the employee to proceed with that arbitration.

At that point, the party being compelled into arbitration has a few options. Continue reading →

Alternatives For Employers Considering Workforce Reduction

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By Andrew J. Sommer and Megan S. Shaked

This article addresses alternatives to reductions in force, or RIFs.[1] An RIF is an involuntary termination of employment, usually due to budgetary constraints, changes in business priorities or organizational reorganization, where positions are eliminated with no intention of replacing them.

Because RIFs can be costly to implement, increase the potential for employment lawsuits and lower morale of the remaining employees, employers may consider alternatives such as furloughs, voluntary separation programs, or VSPs, and early retirement incentive plans, or ERIPs.

Such alternatives can help reduce employers’ labor costs or workforce while avoiding or minimizing adverse consequences associated with a RIF.

This article discusses each of these alternatives to RIFs in detail to help you and your employer client decide which alternative is best under the circumstances:

Furloughs

One alternative to a RIF is a furlough.

Furloughs are temporary layoffs or some other modification of normal working hours without pay for a specified duration. The structure of furloughs can vary. For instance, in some furloughs employees have consecutive days of nonduty — for example, taking the first two weeks of each month off — or take off a designated day each week.

In another example, the employee may take a certain number of days off each month, but which days those are may vary from month to month. Some employers may allow employees to choose which days to take off on their furlough. A furlough may also be a temporary layoff, where the employee remains employed with a predeterminated return date, which may be extended depending on the circumstances.

Furloughs can eliminate the need for a RIF in some cases by reducing the employer’s payroll costs. However, even on unpaid days, furloughed employees do cost the employer something, because employees on a furlough usually receive employment benefits. In a unionized workforce, employers must negotiate the furlough terms and schedule with the union.

Key Pros and Cons of Furloughs Versus RIFs

There are several pros and cons to consider when determining whether a furlough is a good alternative to a RIF. The advantages of furloughs over RIFs include:

Employers avoid employment terminations and the attendant potential legal liability.

Employees don’t lose their jobs.

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US Supreme Court Splits the Baby on Arbitrability of PAGA Claims

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By Megan S. Shaked and Samuel S. Rose

In the latest chapter in the enforceability of employment arbitration agreements in California, the United States Supreme Court in Viking River Cruises, Inc. v. Moriana (Viking River) weighed in on whether the Federal Arbitration Act (FAA) preempts California Supreme Court precedent set in Iskanian v. CLS Transportation (2014) preventing the enforceability of California Private Attorneys General Act (PAGA) waivers.

In Iskanian, the California Supreme Court held, in part, that the FAA does not preempt state law prohibiting waiver of PAGA representative actions in employment agreements.  Specifically, the California Supreme Court determined that “an arbitration agreement requiring an employee as a condition of employment to give up the right to bring representative PAGA actions in any forum is contrary to public policy.”

Now with the Viking decision, rather than treating a PAGA waiver as simply unenforceable in its entirety, the US Supreme Court, relying on a severability clause in the arbitration agreement at issue, decided that Continue reading →

Challenges to California’s Corporate Board Diversity Laws Continue

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A number of lawsuits challenging California’s corporate board diversity laws are still working their way through litigation, even years after the legislation went into effect.

Senate Bill 826

In 2018, California enacted Senate Bill 826, requiring California-based publicly held companies to have a minimum number of women on their boards of directors.  Such boards needed to have at least one female director by the end of 2019.  By the end of 2021, boards needed to have two female directors if the corporation has five directors and three female directors if the corporation has six or more directors.  A corporation out of compliance faces a $100,000 fine for the first violation and a $300,000 fine for a violation in any subsequent year. 

Assembly Bill 979

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Paid COVID-19 Supplemental Sick Leave Returns to California, Again

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California Governor Newsom has signed legislation extending a new allotment of up to 80 hours of COVID-19 supplemental paid sick leave to California workers through new Labor Code Sections 248.6 and 248.7.  The leave is retroactive to January 1, 2022, and continues through September 30, 2022.  Small businesses that employ 25 or fewer workers are not covered by the legislation.   

Use of Sick Leave for Reasons Related to COVID-19

The legislation provides for up to 40 hours of COVID-19 supplemental paid sick leave for employees who are unable to work or telework for certain reasons related to COVID-19, including:

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California Appellate Court Rejects Challenge to COVID-19 Emergency Rule 

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In Western Growers Association, et al, v. Occupational Safety and Health Standards Board, et al, the California appellate court recently affirmed the lower court’s decision denying a challenge to Cal/OSHA’s COVID-19 Emergency Temporary Standard (ETS).  This decision has far-reaching implications, affording considerable deference to the California Occupational Safety and Health Standards Board’s (Board) rulemaking process and authority to bypass regular rulemaking with emergency temporary standards supported by its own “declaration of emergency.”  The Board – which is tasked with promulgating workplace safety rules – has  had an oversized role during the COVID-19 pandemic.   

As background, the Board’s COVID-19 ETS was approved, effective November 30, 2020, over the recommendation of Board staff finding that “Cal/OSHA’s limited resources should continue to be focused on enforcement and consultation outreach specifically targeted at employers and sectors of the economy with deficient COVID-19 protections,” as this is likely to be more effective than new rulemaking.  Since then Cal/OSHA’s ETS has undergone numerous revisions, being “re-adopted” effective June 17, 2021 and then again on January 14, 2022.  The regulation has been a moving target for employers, with the Board each time adopting modified text followed by updated FAQs .   

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Employment Law Implications of the OSHA ETS: Paying for COVID-19 Testing

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By Conn Maciel Carey’s COVID-19 Taskforce

As the OSHA COVID-19 Vaccination and Testing emergency temporary standard (“ETS”) works its way through the courts in pending legal challenges, employers are still scrambling to position themselves in the event the ETS goes back into effect.  (Review our Employer Defense Report and OSHA Defense Report for full background on the ETS and the most recent updates on its current status.)  A key issue to consider is the cost of testing.

Background

Should the ETS go back into effect, employers with 100 or more employees must implement a program to facilitate (1) a COVID-19 vaccination requirement for all employees (known as a “hard mandate”) or (2) a combination of a COVID-19 vaccination requirement and weekly testing, plus face covering requirement, for those employees who choose not to get vaccinated (known as a “soft mandate”).  Under this soft-vaccine mandate, an employee may only report to the workplace after demonstrating either: proof of being fully vaccinated; or for employees who do not get vaccinated or decline to share their vaccination status, proof of a negative COVID-19 test result from within the last week.  Employees who are not fully vaccinated must also wear face coverings when indoors and when occupying a vehicle with another person for work purposes.

Under the ETS, a COVID-19 test must be: Continue reading →