California Opportunity to Work Act Spells Trouble for Employers

California Assembly Bill (AB) 5, the Opportunity to Work Act, was recently approved by the California Assembly Committee on Labor and Employment in April 2017.  The Appropriations Committee postponed a hearing on the bill that was scheduled for May 3, 2017.  Given the strong industry opposition to this bill and its harmful impact on employers, it is likely that the Appropriations Committee is taking a closer look at the bill and the negative Continue reading

Ninth Circuit Rules that Agreements Precluding Employees from Bringing Class Action Claims Violate Federal Labor Law

In a sweeping ruling with far-reaching implications for California employers, the Ninth Circuit Court of Appeals – the federal appellate court for the Western United States – has concluded in Morris v. Ernst & Young, LLP that an employer violates the National Labor Relations Act (NLRA) by requiring employees to sign agreements precluding them from bringing class action or other collective actions regarding their wages, hours, or other terms and conditions of employment.

This decision presents a significant departure from existing, ever evolving law that employers have been navigating in considering class action waivers. In 2014, the California Supreme Court in Iskanian v. CLS Transportation Los Angeles, LLC held that class action waivers in arbitration agreements are enforceable under the Federal Arbitration Act (FAA) but that representative claims under the Labor Code Private Attorneys General Act of 2004 (PAGA) are unwaivable under California law. The PAGA has been an egregious enforcement mechanism permitting employees to bring collective actions seeking penalties and attorneys’ fees for wage and hour violations, no matter how minor. The Ninth Circuit in Sakkab v. Luxottica Retail North America, Inc. subsequently ruled that the FAA does not preempt California’s Iskanian rule prohibiting the waiver of representative claims under PAGA.

The path forward following Iskanian and Sakkab for California employers seeking to ensure legal compliance has been to require the waiver of traditional class actions, and not PAGA actions, to avoid running afoul of the law. There has been some security in this position and, indeed, last month the California Supreme Court in Sandquist v. Lebo Automotive, Inc. implicitly recognized the continuing enforceability of class action waivers in deciding a procedural question over whether the arbitrator or judge has authority to determine whether a particular agreement permits or prohibits class action arbitration.

Following Ernst & Young, however, employers located in the Ninth Circuit may now find themselves facing an unfair labor practice charge before the National Labor Relations Board, by seeking to enforce class action waivers or merely inserting such prohibition into arbitration agreements. The Ninth Circuit has reasoned that an employer’s arbitration agreement prohibiting class actions interferes with the right to engage in concerted activity under the NLRA for the purpose of collective bargaining or “other mutual aid or protection.” The Ninth Circuit found that the FAA, which recognizes the enforceability of arbitration agreements, must yield to federal substantive rights such as the right to engage in concerted activities under the NLRA.

It is important to note that the federal appellate courts are divided on this issue, with the Second, Fifth and Eighth Circuits concluding that the NLRA does not invalidate collective action waivers in arbitration agreements and the Seventh Circuit agreeing with the Ninth Circuit’s position. In all likelihood this issue will make it to the U.S. Supreme Court as the final arbiter but until then employers should tread lightly in drafting and seeking to enforce employee arbitration agreements barring collective actions.

California Takes Another Stab at Disability Access Reform But Again Falls Short

ADAOn May 10, 2016, California Governor Brown signed into law a measure aimed at encouraging small businesses to come into compliance with construction-related access requirements.  The law takes effect immediately.  The authors of Senate Bill 269 recognized that lawsuits are regularly brought by plaintiffs for personal financial gain, not out a desire to improve access for disabled individuals.  This certainly is not news to the state’s hospitality and retail businesses that have been routinely targeted by serial plaintiffs, with financial incentives to pursue multiple suits based on the availability of minimum statutory damages and attorney’s fees.  Yet, SB 269 does not go far enough in addressing the business community’s concerns and taming the surge in litigation in recent years. Continue reading

California Caps Off 2015 Legislative Session with Far-Reaching New Employment Laws

California flagCalifornia’s 2015 legislative session ended, again resulting in new employment laws either expanding existing employee protections or creating entirely new spheres of regulation.  Private employers with a California presence should be aware of at least the following new laws as they conduct an end-of-year review of their personnel policies and procedures. Unless indicated otherwise below, these new laws take effect on January 1, 2016.

Whistleblower Protections Substantially Expanded to Recognize Activities by an Employee’s Family Member (AB 1509)

Governor Brown signed AB 1509, which extends anti-retaliation laws to prohibit retaliation based on not just the employee’s protected activity but because that employee is a “family member” of a person who engaged in, or was perceived to engage in, protected activity. This protected activity may take the form of bona fide complaints of unlawful activity or testifying in legal proceedings. This unprecedented broad expansion of existing whistleblower laws applies to Continue reading