NLRB Puts the Microscope on Employee Handbooks

By: Samuel Rose

Recently, the National Labor Relations Board (NLRB) issued its decision in Stericycle Inc., which changes the analysis for evaluating work rules challenged under Section 8(a)(1) of the National Labor Relations Act (NLRA).

In order to fully understand the impact of this decision, we must go back to some prior decisions by the NLRB in order to analyze how the law in this area has evolved.

In 2004, the NLRB issued its decision in Lutheran Heritage Village-Livonia, which held that “employers violated the NLRA by maintaining workplace rules that do not explicitly prohibit protected activities, were not adopted in response to such activities, and were not applied to restrict such activities if the rules would be ‘reasonably construed’ by an employee to prohibit the exercise of NLRA rights.” Continue reading

The Story That Just Won’t End: Employment Arbitration Agreements

Last year, the United States Supreme Court in Viking River decided, in part, that where a valid arbitration agreement existed, individual PAGA claims could be compelled to arbitration and the remaining representative PAGA claims could be dismissed for lack of standing. For the full background on Viking River, our blog article on that decision can be found here.

At the time, we predicted that this would not be the last we heard about PAGA standing because the U.S. Supreme Court left open the possibility that it misunderstood PAGA and that the California courts would have the last word on the subject. Now the California Supreme Court has weighed in on the scope of PAGA standing.

Last week, the California Supreme Court issued its decision in Adolph v. Uber Technologies, Inc. The Court, disagreeing with Viking River, found that PAGA plaintiffs retain standing to pursue representative claims on behalf of aggrieved employees in court, even when their individual claims have been compelled to arbitration. As the final arbiter of what PAGA requires, the California Supreme Court made it clear that PAGA standing “is not affected by enforcement of an agreement to adjudicate a plaintiff’s individual claim in another forum. Arbitrating a PAGA plaintiff’s individual claim does not nullify the fact of the violation or extinguish the plaintiff’s status as an aggrieved employee.”

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NLRB Throws Its Hat Into the Non-Compete Provision Conversation

By Samuel S. Rose

On May 30, 2023, Jennifer Abruzzo, General Counsel at the National Labor Relations Board (NLRB), issued Memorandum GC 23-08 regarding Non-Compete Agreements. While the guidance memo is not law, it provides employers with context for the NLRB’s enforcement position and future policy decisions. This is the latest development on the issue of non-competes, with the FTC already considering a rule that would essentially prevent employers from entering into non-compete agreements with employees.

What Does the Memo Say? Continue reading

The Current Landscape of Employer Liability for Supervisor Sexual Harassment under California’s FEHA

By Samuel S. Rose

The California Court of Appeal has once again weighed in on employer liability for a supervisor’s sexual harassment under the California Fair Employment and Housing Act through its decision in Atalla v. Rite Aid Corporation (2023) 89 Cal.App.5th 294.

In Atalla, Plaintiff and a district manager for Rite Aid had developed a years-long friendship prior to Plaintiff joining Rite Aid as a staff pharmacist. The friendship began in 2017 and Plaintiff began employment at Rite Aid in 2018. The district manager supervised staff pharmacists. Plaintiff and the district manager had frequently and consistently engaged in conversation over text message regarding a variety of topics, including vacations, family, personal matters, and work.

In 2019, during a late-night text message conversation, the district manager sent an inappropriate photo to Plaintiff. The district manager sent a text message about being drunk and that he meant to send the photo to his wife. Plaintiff deleted the photo and the text. The district manager then sent another inappropriate photo and Plaintiff sent a text asking him to stop.

The trial court granted Rite Aid’s summary judgment motion. In affirming the trial court’s ruling, the Court noted that Plaintiff did not raise a triable issue of fact that the district manager was acting as a supervisor during the text exchange. The Court noted that Plaintiff and the district manager had a prior texting relationship, and the photos were sent as a result of that personal relationship. It also pointed out that the texts occurred outside of the workplace and well after working hours.

The Court notes that its decision is consistent with the current landscape of the law on point. It points to the following four cases, which we have listed with a brief discussion of their facts and holdings. Continue reading

CA Laws Take Aim at Sexual Assault and Human Trafficking

Sexual assault and human trafficking was one of the top issues for the California Legislature and Governor Gavin Newsom in the most recent legislative session. At least six (6) bills will go into effect in 2023 that relate in various ways to sexual assault and human trafficking. While some of the new bills apply generally (including to employers), many of them are industry-specific (i.e. hotels, cosmetology, barbering, etc.) Below is a summary of some of the laws that will soon be going into effect.

Human Trafficking

AB 1788

AB 1788 allows for a civil penalty to be imposed against a hotel if a supervisor knew of or acted with reckless disregard of activity constituting sex trafficking within the hotel and failed to inform law enforcement. It would also allow for such penalties if the supervisor was acting within the scope of employment and benefited from participating in a venture that the employee knew or should have known constituted sex trafficking.

The penalties can range from $1,000 to $10,000, depending on the number of violations in a calendar year. Continue reading

California Confirms Meal and Rest Period Claims are a Hook for Attorney’s Fees Awards

By Samuel Rose and Megan Shaked

A few months ago, we wrote a blog article on the California Supreme Court’s decision in Naranjo v. Spectrum Security Services, Inc., which held that premium pay for meal and rest break violations is considered “wages,” paving the way to award waiting time and wage statement penalties based on meal/rest period violations alone. We noted that the practical impact of the Naranjo decision could be to encourage class action and PAGA (Labor Code Private Attorneys General Act) litigation within California by providing further remedies in meal and rest period litigation and inflating the settlement value of these cases.

Now, we are starting to see the real impacts of the Naranjo decision. The California Court of Appeal has issued its decision in Betancourt v. OS Restaurant Services, LLC after remand from the Supreme Court with instructions to reconsider its initial opinion in light of Naranjo. Originally, the Court of Appeal decided in Betancourt that, based on Kirby v. Inmoos Fire Protection, Inc. (2012) 53 Cal.4th 1244, an action brought for failure to provide meal and rest breaks is not based on nonpayment of wages. That meant that the Plaintiff could not recover for waiting time penalties and wage statement violations, and that the Plaintiff could not recover attorney fees under Labor Code section 218.5(a).

In applying Naranjo, the Court of Appeal in Betancourt had to reverse course, confirming that Continue reading

Ninth Circuit Continues to Write the Story of Employment Arbitration Agreements in California

By: Samuel S. Rose

For our readers who are following the ongoing battle over employer arbitration agreements in California, you have probably been following the legal battle over AB 51 (2019), which added section 432.6 to the California Labor Code. When AB 51 was first signed by the governor, we expected that it would be challenged based on preemption by the Federal Arbitration Act. Litigation did ensue and, as we wrote about in this article, the district court issued a preliminary injunction preventing AB 51 from going into effect. Continue reading

California Supreme Court Adds Fuels to Meal and Rest Break Litigation by Adopting Cumulative Penalties

By Andrew J. Sommer and Samuel S. Rose

For the last couple of years, we have been keeping an eye on Naranjo v. Spectrum Security Services, Inc. as it’s made its way through the California state courts. Now, the California Supreme Court has issued its unanimous decision with wide-ranging ramifications over meal and rest break violations. As a result of the Court concluding that premium pay for meal and rest break violations is “wages,” it has paved the way to award as well waiting time and wage statement penalties based on meal/rest period violations. The practical impact of this decision is to encourage class action and PAGA (Labor Code Private Attorneys General Act) litigation within the state, providing plaintiffs’ attorneys further remedies in meal and rest period litigation and inflating the settlement value of these cases.

Meal and Rest Break Premiums Are Considered “Wages”

The first issue that the Court considered in Naranjo was whether premium pay available pursuant to Labor Code section 226.7 for meal/rest period violations is considered “wages.” Section 226.7 provides that an “employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each work day that [a] meal or rest period is not provided.”

The Supreme Court found that “[a]lthough the extra pay is designed to compensate for the unlawful deprivation of a guaranteed break, it also compensates for the work the employee performed during the break period.” Therefore, the Court concluded, “[t]he extra pay…constitutes wages subject to the same timing and reporting rules as other forms of compensation for work.”

In reversing the Court of Appeal, which held that meal/rest period premium pay did not constitute wages, the Supreme Court noted that the reasoning rested on a “false dichotomy,” namely that the payment must be either a legal remedy or wages. The Court held, for purposes of Section 226.7, premium pay is both a legal remedy and wages, which leads us to the next holding in the case.

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