Contact: Steven M. Schneider, Anthony Amendola and Amr Shabaik; Mitchell Silberberg & Knupp LLP (Los Angeles, California, USA)
As we embark upon a new year, now is the time to look back at the significant labor and employment law developments of 2012 and prepare for new challenges in 2013.
New Laws And Regulations
Employee right to inspect personnel files expanded. Under prior law, an employee had a right to inspect his or her personnel records (Labor Code § 1198.5) and to obtain a copy of any document signed by the employee (Labor Code § 432). AB 2674 amends Labor Code § 1198.5 so that, in addition to inspection, an employee or his/her representative also may obtain a copy of any personnel records. For purposes of the statute, “representative” includes any person authorized by a current or former employee in writing. Personnel records must be made available for inspection and/or copying within 30 days of a written request (which may be extended to 35 days by mutual agreement). Moreover, if a verbal request is made, the employer must provide a form on which the request can be made in writing. Where a copy of the records is requested, the employer may require the employee to reimburse the employer for the actual cost of reproduction. Before personnel records are inspected or copied, the employer may redact the name(s) of any nonsupervisory employee appearing in the personnel records.
AB 2674 also expressly extends the right to inspection and copying of personnel records to former employees. However, a former employee only may request to inspect and/or copy records once per year. Moreover, if the former employee was terminated for violating a law or a workplace policy concerning harassment or violence, the employer may comply with an inspection request by bringing the records to a neutral location or by mailing them to the employee. As amended, Labor Code § 1198.5 additionally requires that employers must maintain personnel records for at least three years. A violation of the statute is an infraction (criminal charge), and the new law provides for the recovery of a penalty of $750 per violation, as well as for the recovery of attorneys’ fees and injunctive relief.
New law makes it easier to recover penalties for paystub violations. SB 1255 amends Labor Code § 226, which provides that an employee suffering an injury as a result of an employer’s knowing and intentional failure to provide itemized wage statements is entitled to penalties, costs, and attorneys’ fees. Before SB 1255, courts had ruled that an employee had to show some actual injury in order to recover penalties. SB 1255 now provides that an employee is “deemed” to suffer an injury if the employer fails to provide a wage statement or fails to provide a wage statement from which the employee can promptly and easily determine the following: the amount of gross or net wages paid, the deductions made from gross wages, the name and address of the employer, and the name of the employee and the last four digits of the employee’s Social Security number. Penalties for violation remain the greater of actual damages or $50 for the initial pay period and $100 for each pay period thereafter, up to $4,000.
New law limits employer access to personal social media accounts. California AB 1844 enacts California Labor Code § 980 to prohibit California employers from requesting or requiring employees or applicants to provide their personal social media account access information. Employers are also prohibited from asking employees or applicants to access their personal social media accounts in the employer’s presence. This new law also prohibits employers from retaliating against an employee or applicant who refuses to comply with a request or requirement that is made unlawful under the new law. Section 980 defines “social media” as any electronic service or account, or electronic content, including personal videos, still photographs, blogs, video blogs, podcasts, instant and text messages, email, online services or accounts, and Internet website profiles or locations. There is an exception permitting an employer to request access to an employee’s personal social media information that reasonably is believed to be relevant to an investigation of allegations of employee misconduct or violations of law or regulations. Also, an employer may request or require an employee to disclose a username, password, or “other method” of login for the purpose of accessing employer-issued electronic devices. Notably, the statute expressly states that the Labor Commissioner is not obligated to investigate or determine any violation of the act, which will permit claimed violations to proceed directly to court.
FEHC eliminated; duties transferred to the DFEH. SB 1038 eliminates the California Fair Employment and Housing Commission (FEHC), transfers the duties of the FEHC to the Department of Fair Employment and Housing (DFEH), and creates within the DFEH a new entity called the Fair Employment and Housing Council. The former FEHC had two main functions: (1) to adjudicate discrimination complaints prosecuted by the DFEH; and (2) to promulgate regulations and define and interpret the Fair Employment and Housing Act. Under SB 1038, the DFEH will assume the FEHC’s regulatory powers, but there will no longer be an administrative body designated to decide DFEH-prosecuted complaints. The new Fair Employment and Housing Council within the DFEH will assume certain of the FEHC’s former powers and duties and will decide which cases will be prosecuted by the DFEH. The DFEH is now authorized to file cases directly in California civil court.
FEHA’s definition of “sex” expanded to include breastfeeding. The California Legislature has expanded the definition of “sex” in the Fair Employment and Housing Act (FEHA), which prohibits specified discriminatory practices in employment, to include breastfeeding and medical conditions relating to breastfeeding. (Under federal law, breastfeeding is not a protected classification.)
Religious accommodation duty under FEHA expanded. Under the FEHA, employers must reasonably accommodate an employee’s religious beliefs and observances, unless doing so would impose an undue hardship on the employer. AB 1964 clarifies that religious dress and grooming practices are covered “beliefs and observances.” In addition, AB 1964 clarifies that the “undue hardship” standard applied under the FEHA with respect to disability accommodations (“significant difficulty or expense”), rather than the narrower federal Title VII standard, will apply to the FEHA religious-discrimination accommodation. (Under Title VII, undue hardship may be established where accommodating the religious practice would result in more than a de minimis cost to the employer.) AB 1964 also specifies that segregation, such as assigning an employee to a stock room out of public view, is not an acceptable religious accommodation.
Temporary variable incentive payments that increase, but do not decrease, exempted from written commission agreement requirement. Labor Code § 2751, enacted in 2011, requires, effective January 1, 2013, that any agreement to pay sales commissions must be in writing and must set forth how commissions are to be calculated and paid. Currently, this requirement does not apply to short-term productivity bonuses (such as those paid to retail clerks) and certain bonus and profit-sharing plans. AB 2675, which amends Labor Code § 2751, adds a third exemption for temporary variable incentive payments that increase the payments to be made “under the written contract.” While not free from doubt, this new exemption appears to address temporary additional “spiffs” that some employers use to motivate their commissioned salespeople to move particular merchandise in a designated time period, for example, an extra commission of $350 for each sale of 2012 vehicles made in the month before the new models appear.
DLSE revises WTPA notice template and FAQs. Labor Code § 2810.5, the California Wage Theft Prevention Act (WTPA) of 2011, requires employers to provide a written wage notice “at the time of hiring” to nonexempt employees. In April 2012, the DLSE revised its original notice template and issued revised and expanded FAQs for the second time since the WTPA went into effect. DLSE requires employers to provide the revised notice to employees hired after April 12, 2012. However, employees who received the prior version do not need to be provided with the revised notice until the information provided in a prior notice changes. The revised notice and FAQs are available on the DLSE website: http://www.dir.ca.gov/dlse/Governor_signs_Wage_Theft_Protection_Act_of_2011.html
The prior notice required that employers specify whether the “employment agreement” was oral or written. The revised notice now requires only that the employer indicate whether a written agreement designating the rates of pay exists and, if so, whether all rates and bases of pay are contained in the written agreement. If there is a written employment agreement but it does not specify the rates and bases of pay, then the employer should indicate “no” on the notice. The revised notice also makes the “Acknowledgment of Receipt” portion of the notice optional. If an employee refuses to sign the notice, the employer should indicate the refusal on the employer’s file copy of the notice provided to the employee.
In its revised FAQs, the DLSE explained that “time of hire” for purposes of providing the notice means the date that both the employer and employee agree is the “time of hire,” as long as it is not after the employee’s start date.
Temporary-services employers must provide additional information on paystubs and in wage notice. Beyond the extensive paystub requirements already in place under Labor Code § 226, AB 1744, which becomes effective on July 1, 2013, requires a temporary-services employer to include in its paystubs the rate of pay and the total hours worked for each assignment. Moreover, AB 1744 further requires that wage notices prepared by a temporary-services employer pursuant to Labor Code § 2810.5 include the name, physical address of the main office, the mailing address if different from the physical address of the main office, and the telephone number of the legal entity for whom the employee will perform work. Thus, it appears that, each time an employee of a temporary-services employer is assigned to a new client, a new wage notice must be prepared. For purposes of this Act, “temporary-services employer” is defined as an employing unit that contracts to supply workers to perform services for the clients or customers and that performs all of the following functions: negotiates with clients and customers for matters such as the time and place where the services are to be provided; determines assignments or reassignments of workers, even if workers retain the right to refuse specific assignments; retains the authority to assign or reassign a worker to another client or customer when the worker is determined unacceptable by a specific client or customer; assigns or reassigns workers to perform services for clients or customers; sets the rate of pay of workers, whether or not through negotiation; pays workers from its own account or accounts; and retains the right to hire and terminate workers.
Wage agreements to pay a fixed amount as compensation for both straight time and overtime hours unenforceable. California AB 2103 amends the Labor Code and states that payment of a fixed salary to a nonexempt employee will be deemed to be payment only for the employee’s regular nonovertime hours, notwithstanding any private agreement or “explicit mutual wage agreement” to the contrary. The legislative history of AB 2103 makes clear that its express intent is to overturn Arechiga v. Dolores Press, 192 Cal. App. 4th 567 (2011), in which a “mutual wage agreement” that specified a salary to be paid for a fixed number of regular and overtime hours per week was held enforceable under California law. AB 2103 adopts the California DLSE’s position that any agreement to pay a fixed amount as compensation for both straight time and overtime hours is unenforceable, and, where such an agreement exists, the fixed amount would be deemed to compensate the employee only for the first forty (40) hours of work each week.
Workers’ compensation reform. SB 863 is workers’ compensation reform legislation. The legislation offsets increases in permanent disability benefits and potentially lowers system costs for employers by eliminating or reforming services that are frequently subject to litigation. For example, the bill eliminates increased permanent disability benefits associated with “add-on claims” (such as psychiatric, sexual-dysfunction, and sleep-disorder claims added on to the original injury), lowers permanent disability payments by 15% in some circumstances, limits access to doctors outside of the Medical Provider Network (MPN), and implements an Independent Medical Review (IMR) process pursuant to which the finding of the IMR is binding on all parties.
New law targets abuses of disability access law. In recent years, retailers and other establishments serving the public have been bombarded with lawsuits under public accommodation laws alleging that such establishments are not fully accessible to the disabled. (These lawsuits often address such issues as aisle width, counter height, etc.) SB 1186 limits such litigation arising from technical violations concerning disability access. The bill bars lawyers from issuing prelitigation “demands for money.” In addition, SB 1186 requires attorneys to send a notice letter, listing any alleged construction-related violations, at least 30 days before filing a lawsuit. The bill also significantly reduces potential damages against business owners who correct alleged violations within 30-60 days of receiving such a notice from a minimum of $4,000 to as little as $1,000. SB 1186 also prevents “stacking” of multiple claims, wherein a claimant makes repeated visits to the same establishment in order to increase monetary damages. SB 1186 now requires a plaintiff to explain the need for multiple visits to the same business with a known uncorrected barrier to access.
New human trafficking posting requirements. SB 1193 requires certain businesses and establishments to post a Department of Justice model notice that contains information related to slavery and human trafficking, including information related to organizations that provide services in support of the elimination of slavery and human trafficking. This law requires covered establishments to post the notice in a conspicuous place near the entrance of the establishment or in another conspicuous location in clear view of employees and the public where similar notices are customarily posted. Businesses subject to the posting requirement are: (1) Off-sale general licensees under the Alcoholic Beverage Control Act; (2) adult or sexually oriented businesses; (3) airports; (4) intercity passenger rail or light rail stations; (5) bus stations; (6) highway truck stops; (7) emergency rooms within general acute-care hospitals; (8) urgent-care centers; (9) farm labor contractors; and (10) privately operated job recruitment centers.
New law authorizes evaluation of potential retirement savings law. California SB 1234, the California Secure Choice Retirement Savings Trust Act (the “Act”), authorizes the establishment of a board to evaluate the feasibility of a state-mandated retirement savings program. If adopted, the program would require private nonunionized employers without a retirement or 401(k) plan to offer eligible employees the option to contribute a portion of their salary or wages to a State-created retirement savings account. Unless they opt out, eligible employees will be required to participate by contributing three percent of their wages to this program. Before the program can be established, there are several preconditions that must be met. First, the appointed board must conclude that this program would be legally and financially possible. Legally, the individual employee retirement accounts would have to receive the equivalent of IRA treatment from the IRS so that the compulsory contributions would not be subject to immediate income tax. Also, the entire program would have to receive an exemption from ERISA’s detailed regulation of retirement plans, which might not happen since this program is clearly intended to be a retirement plan. Finally, the Legislature later would have to authorize actual commencement of this program.
New Pregnancy Disability Leave regulations take effect. The California Fair Employment and Housing Commission has promulgated new pregnancy disability leave (“PDL”) regulations that became effective on December 30, 2012. The Fair Employment and Housing Act (“FEHA”) has long obligated an employer with five or more employees to provide an employee with up to four months of PDL per pregnancy during a twelve-month period, and there are no minimum-hours-worked or length-of-service requirements. The new regulations clarify some of the prior requirements pertaining to PDL, including specifying that breastfeeding is protected under the PDL laws.
The new PDL regulations also require employers to provide employees with reasonable advance notice of employees’ rights and obligations under the Fair Employment and Housing Act (“FEHA”) regarding pregnancy, childbirth, or related medical conditions. The PDL regulations provide two new alternative notices that comply with this requirement – Notice A (for employers with fewer than 50 employees) and Notice B (for employers with more than 50 employees that also are required to comply with the California Family Rights Act and the federal Family Medical Leave Act). Employers are required to post the new notices in a “conspicuous place or places where employees congregate,” and electronic or email notification is sufficient. A copy of the applicable notice also must be provided as soon as practicable after the employee notifies the employer of her pregnancy or requests a reasonable accommodation, transfer, or leave. Employers who fail to provide the required notice are prohibited from taking any “adverse action” against an employee, such as denying a reasonable accommodation, transfer, or leave for pregnancy-disability purposes. An employer also must continue to provide health-insurance coverage to an eligible employee during the PDL, for up to four months, at the same level and under the same conditions as existed prior to the employee’s leave. In addition, if the employee subsequently takes leave under the California Family Rights Act (“CFRA”) to bond with a baby, the employer must continue to provide health insurance for the period of the CFRA leave, up to twelve weeks.
When an employee on PDL leave is ready to return to work, an employer may no longer refuse to reinstate the employee to the same position on the grounds that preserving the employee’s job duties (such as leaving it unfilled or filling it with a temporary employee) would substantially undermine the employer’s ability to operate the business safely and efficiently. Now an employer may deny reinstatement to the same position only where the position no longer exists for reasons unrelated to the leave. If an employer has legal grounds not to reinstate the employee to the same position, it must place the employee in a comparable position, unless it can prove by a preponderance of the evidence that she would not have been offered a comparable position if she had been continuously at work. Otherwise, the employer has an affirmative duty to provide notice to the employee of available comparable positions. A position is “available” if it is open within 60 calendar days of the employee’s reinstatement date.
The new PDL regulations prohibit employers from discriminating against or harassing an employee based on “perceived pregnancy,” meaning that the employee is “regarded or treated by an employer or other covered entity as being pregnant or having a related medical condition.” An employer, however, is not required to reasonably accommodate, transfer, or provide leave to an employee based on “perceived pregnancy.”
Important Court Decisions
Discrimination Law
Ninth Circuit applies McDonnell Douglas burden-shifting to summary judgment motion in
age-discrimination case. In Shelly v. Geren, 666 F.3d 599 (2012), the plaintiff sued the Secretary of the Army and the United States Army Corps of Engineers (the Corps) for violating the U.S. Age Discrimination in Employment Act (ADEA) by failing to interview him and rejecting his applications for two promotions. The district court granted the Corps’ motion for summary judgment. The district court declined to analyze the motion in accordance with the burden-shifting approach adopted in McDonnell Douglas Corporation v. Green, 411 U.S. 792 (1973), finding it inapplicable to ADEA cases after the Supreme Court’s decision in Gross v. FBL Financial Services, Inc., 557 U.S. 167 (2009). The Ninth Circuit reversed and held that the district court incorrectly applied Gross, which concerned instructions at trial rather than the parties’ burden on summary judgment. The Ninth Circuit stated that McDonnell Douglas remains good law on summary judgment.
Court of Appeal vacates pregnancy-bias award because it was prejudicial error for the trial judge not to give a “business judgment” jury instruction. In Veronese v. Lucasfilm LTD., A129535, the Court of Appeal vacated a jury’s award of damages and found that the trial court committed prejudicial error by rejecting a “business judgment” jury instruction requested by the defendant, Lucasfilm LTD. In this case, Julie Veronese was offered a one-month trial position as the assistant to Sarita Patel, the manager of George Lucas’s estate. Before starting, Veronese learned she was pregnant, and her start date was eventually postponed twice. During this same period of time, there was construction work taking place on the estate, and Patel sent an email to the human resources department stating her concern that the “stress that is around here” could negatively impact a pregnant woman’s health. The human resources department agreed with the tryout plan, but shortened the period to three weeks. In response to the shortened trial period, Veronese sent Patel an email stating her concern that “things have changed because [she is] pregnant.” Patel and Veronese agreed that the position would not be a good fit.
During trial, Lucasfilm proposed jury instructions that included “you cannot find liability for discrimination or retaliation if you find that Lucasfilm made an error in business judgment. Instead, Lucasfilm can only be liable to Julie Gilman Veronese if the decisions made were motivated by discrimination or retaliation related to her being pregnant.” However, the instructions proposed by Veronese were the instructions given. Those instructions included “A potential hazard to a fetus or an unborn child is not a defense to pregnancy discrimination.” The sole authority that Veronese cited in support of the instruction was Automobile Workers v. Johnson Controls, Inc., 499 U.S. 187 (1991), in which the Supreme Court held that a policy that extended to any woman capable of bearing children could not pass muster. The Court of Appeal held that Lucasfilm had no such policy and that it was prejudicial error not to give the instructions proposed by Lucasfilm because Patel was entitled to exercise her business judgment, without second-guessing. The instructional error permitted the jury to construe the employer’s genuine concern for the employee’s pregnancy as unlawful discrimination.
Retaliation Law
Employers may discipline or terminate an employee for making false charges. In Joaquin v. City of Los Angeles, 202 Cal. App. 4th 1207 (2012), the Court of Appeal held that in appropriate circumstances an employer may discipline or terminate an employee for making false charges, even where the subject matter of those charges was an allegation of sexual-harassment. In Joaquin, the plaintiff police officer sued the City of Los Angeles, alleging that his termination violated the FEHA because it was in retaliation for his having filed a sexual-harassment complaint against a sergeant. The Court held that the employer’s articulated reason for the termination – that the officer fabricated the sexual-harassment complaint – was a legitimate, nonretaliatory reason for the adverse employment action. The Court held that the officer failed to provide substantial evidence that the termination was otherwise motivated by a retaliatory animus.
Partner may sue partnership for retaliation for opposing sexual harassment of employee. In Fitzsimons v. California Emergency Physicians Medical Group, 205 Cal. App. 4th 1423 (2012), the Court of Appeal held that a partner has standing to assert a claim for retaliation under the FEHA against the partnership. The plaintiff was a partner in defendant California Emergency Physicians Medical Group (CEP). She alleged that CEP retaliated against her because she reported to her supervisors that certain officers and agents of CEP had sexually harassed female employees of CEP’s management and billing subsidiaries. The Court of Appeal held that the plaintiff, although a partner, was a “person” protected from retaliation under Government Code Section 12940. While the partnership was not in an employment relationship with the plaintiff, the partnership was the employer of the people who were the purported victims of the alleged harassment that this plaintiff reported.
Wage And Hour Law
California Supreme Court issues meal and rest period decision. In Brinker Restaurant Corp. v. Superior Court, 53 Cal. 4th 1004 (2012), the California Supreme Court issued its much awaited meal and rest period decision. Two meal period issues were before the Court – (1) the extent of an employer’s duty to provide meal periods and (2) the timing requirements for meal periods. With respect to the first issue, the Court held that, as long as an employer provides, and relieves employees of all duty during, a legally required meal period, the employer will not be liable for an additional hour of pay (a “meal premium”) when an employee nonetheless elects to perform work during the meal period. “At most,” the Court noted, the employer will be liable for “straight pay” if it “knew or reasonably should have known that the worker was working through the authorized meal period.” If the employer does not relieve the employee of all duty or the nature of the employee’s work precludes him or her from taking a required meal period, then a meal premium will be owed.
Regarding the timing of meal periods, the Court rejected the plaintiff’s position that a 30-minute meal period is required whenever an employee works five or more consecutive hours (the so-called “rolling five” contention). The Court concluded that a first 30-minute meal period must be provided “after no more than five hours of work in a day” and a second meal period must commence after no more than ten hours of work. (For motion picture industry employees and manufacturing industry employees covered by a collective bargaining agreement, the law permits the first meal period to commence after six hours of work.) Thus, even if an employee takes his or her first meal period early in a shift and then works five or more consecutive hours, a second meal period is not required unless the employee has worked ten or more hours.
Interpreting the rest period requirements, the Supreme Court held that California employees are entitled to one 10-minute rest period for any shift lasting from 3-1/2 to 6 hours, two 10-minute rest periods for shifts from 6-10 hours, and three 10-minute rest periods for shifts of more than 10 hours. Employees are not entitled to a rest period for shifts lasting longer than 2 but less than 3-1/2 hours. The Supreme Court also rejected the plaintiff’s contention that employers must provide these rest periods in the middle of work periods and that the first rest period always must precede the first meal period. Rather, the Court held that the requirement to provide rest periods in the middle of work periods “insofar as practicable” means that employers are required “to make a good faith effort to authorize and permit rest breaks in the middle of each work period, but may deviate from that preferred course where practical considerations render it infeasible.” The Court did not, however, express any opinion as to “what considerations might be legally sufficient to justify such a departure.”
Justice Werdegar, who authored the unanimous decision of the Court, also wrote a concurring opinion joined by one other Justice and noted that, if an employer’s timekeeping records do not show clocking out and back in for a meal period, “a rebuttable presumption arises that the employee was not relieved of duty and no meal period was provided.” Also, with respect to those meal periods that may be waived (i.e., the first when an employee will complete the day’s work in six or fewer hours and the second if the employee will complete the day’s work in twelve or fewer hours), the concurrence places the burden of proof on employers to establish that employees voluntarily waived meal periods.
Pharmaceutical sales representatives are exempt under the FLSA. In Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156 (2012), the U.S. Supreme Court held that pharmaceutical sales representatives who call on physicians and encourage them to prescribe products are “outside salesmen” exempt from the Fair Labor Standards Act overtime requirements. The Court found that, although pharmaceutical reps do not sell products directly to physicians, they nonetheless are exempt because they are primarily engaged in sales, which includes “any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.”
A prevailing party in action for meal and rest period compensation is not entitled to recover attorney fees. In Kirby v. Immoos Fire Protection, Inc., 53 Cal. 4th 1244 (2012), the California Supreme Court held that a defendant cannot recover its attorney fees when it prevails in an action for meal and rest period compensation under California Labor Code § 226.7. The Court held that a § 226.7 claim is not a claim for which attorney fees can be awarded to a prevailing employee under Labor Code §§ 1194 or 218.5. Section 1194 allows successful plaintiffs to recover attorney fees in actions for the “legal minimum wage or the legal overtime compensation.” The Court rejected the plaintiff’s argument that the required extra hours of payment for missed meal or rest periods is tantamount to a statutorily prescribed minimum wage. Similarly, the Court held that an action under 226.7 does not constitute an “action brought for the nonpayment of wages” within the meaning of Section 218.5.
California Court of Appeal limits application of the administrative exemption from overtime pay. In Harris v. Superior Court, 207 Cal. App. 4th 1225 (2012), the Court of Appeal held that insurance claims adjustors were not exempt from the payment of overtime. The Court of Appeal viewed the adjusters’ duties as nonexempt “production” duties. The Court noted that, in order for an employee to be subject to the administrative exemption under the applicable IWC Wage Order, he or she must be primarily engaged in work that qualitatively is “directly related to management policies or general business operations.” According to the Court, adjusting insurance claims is just carrying out the day-to-day “production” work of an insurance company and is not directly related to management policies or general business operations. However, on October 24, 2012, the California Supreme Court denied review and granted depublication in this case, which means that the Court of Appeal decision may not be cited as precedent. Accordingly, the exempt status issue of insurance adjustors is still an open question in other cases.
Class Action / Arbitration Law
NLRB finds employer arbitration policies barring class actions violate the NLRA. In D.R. Horton, Inc., 357 NLRB No. 184 (January 1, 2012), the NLRB held that an employer violated Section 8(a)(1) of the NLRA when it required its employees to sign, as a condition of employment, an arbitration agreement that precluded them from bringing “joint, class, or collective claims” related to their employment in either arbitration or the courts. The NLRB held the employer’s arbitration agreement troubling because it was a mandatory condition of employment and because it prohibited collective or class actions in any forum. The NLRB contended the agreement impinged upon a core substantive right protected by the NLRA – a worker’s right to engage in concerted action for mutual aid or benefit. As a remedy, the NLRB ordered the employer to either rescind the arbitration agreement entirely or revise it to make clear that the arbitration agreement did not constitute a waiver of employees’ right to bring employment-related class actions and/or to file charges with the NLRB. The NLRB stated that the United States Supreme Court’s holding in AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), was not controlling because that case did not involve either the waiver of rights protected under the NLRA or even an employment agreement.
NLRB Judge finds 24 Hour Fitness arbitration clause violates federal labor law despite opt out provision. In 24 Hour Fitness USA Inc., 20-CA-35419 (November 6, 2012), an NLRB Administrative Law Judge (ALJ) held 24 Hour Fitness USA Inc.’s arbitration policy unlawful in spite of a clause saying workers could opt out. The policy required new employees to agree in writing to submit all employment-related claims to individual arbitration. Employees were also prohibited from discussing such claims with their coworkers. Citing the NLRB’s D.R. Horton decision, the ALJ held that both the class-action ban and the nondisclosure restriction unlawfully limited employees from exercising their rights under federal labor law.
The ALJ also rebuffed the employer’s contention that its policy was distinct from D.R. Horton’s mandatory agreement because it included a provision giving employees a 30-day window to opt out. The ALJ called the opt-out provision “an illusion” and held that requiring employees to affirmatively act to preserve rights already protected by the NLRA through an opt-out process is unlawful. As a remedy, the ALJ not only called for 24 Hour Fitness to stop maintaining and enforcing its arbitration policy but also to notify any arbitral or judicial tribunal in which it pursued enforcement of the policy since August 15, 2010, that it desires to withdraw any such action and that it no longer objects to its employees bringing or participating in class or collective actions
New U.S. Supreme Court arbitration decision may shed light on future of employment class-action waivers. In CompuCredit Corp. v. Greenwood, 132 S. Ct. 665 (2012), decided two days after D.R. Horton, the Supreme Court of the United States considered whether the Credit Repair Organizations Act (CROA) precludes enforcement of an arbitration agreement in a lawsuit alleging violations of that statute. The plaintiffs brought the matter as a class action, despite having previously agreed to resolve all disputes by binding arbitration. The Supreme Court rejected their efforts to avoid arbitration, finding that, unless the Federal Arbitration Act’s (FAA) mandate has been “overridden by a contrary congressional command,” agreements to arbitrate must be enforced “according to their terms.” The Supreme Court held that, because the “CROA is silent on whether claims under the Act can proceed in an arbitrable forum, the FAA requires the arbitration agreement to be enforced according to its terms.”
The NLRB’s prior attempt in D.R. Horton to read into the NLRA a prohibition of class-action waivers is undermined by the Supreme Court’s decision in CompuCredit. Since there is no “congressional command” in the NLRA that prohibits enforcement of an arbitration agreement according to its terms, arbitration agreements likely will be enforced as written.
Court of Appeal affirms order compelling individual arbitration of California wage claims. In Nelson v. Legacy Partners Residential, Inc., 207 Cal. App. 4th 1115 (2012), a property manager filed a putative class action against her employer alleging violations of various California wage and hour laws. The plaintiff had signed an agreement to arbitrate any disputes with her employer. The Court held that the arbitration clause was enforceable.
The Court cited a number of cases holding that AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), overturned Gentry v. Superior Court, 42 Cal. 4th 443 (2007), but assumed, without deciding, that Gentry is still good law. In Concepcion the Supreme Court held that the Federal Arbitration Act (FAA) preempts a California Supreme Court decision prohibiting class-action waivers in consumer arbitration agreements. Concepcion provides legal support for upholding class-action waivers in employee arbitration agreements. Gentry holds that class arbitration waivers should not be enforced if a trial court determines, based on certain factors, that class arbitration would be a significantly more effective way of vindicating the rights of affected employees than individual arbitration. In this case, the Court held that Gentry applied but that the plaintiff had failed to make the factual showing required under Gentry that classwide arbitration was required to vindicate her rights.
The Court also held that the NLRB decision of D.R. Horton was incorrectly decided and did not apply because the NLRA does not apply to an “individual employed as a supervisor.” The Court concluded that the plaintiff’s title as a “property manager” likely excluded her from coverage by the NLRA.
California Court of Appeal holds that Gentry remains good law despite the U.S. Supreme Court rulings in Stolt-Nielson and Concepcion upholding contractual class-action waivers. In Franco v. Arakelian Enterprises, Inc., B232583 (2012), the California Court of Appeal held that Gentry v. Superior Court, 42 Cal. 4th 443 (2007), is still good law and was not overruled by Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 130 S. Ct. 1758 (2010), and AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011). Gentry set forth several factors to be applied on a case-by-case basis to determine whether a class-action waiver should be enforced or whether class arbitration would be a more effective way of vindicating the rights of affected employees. The Court concluded that Gentry remains good law because, as required by Concepcion, it does not establish a categorical rule against class-action waivers but, instead, establishes several factors to be applied on a case-by-case basis to determine whether a class-action waiver precludes employees from vindicating their statutory rights. Stolt-Nielson held that class arbitration is not permitted unless the parties have expressly or implicitly agreed to it. The Court held, as required by Stolt-Nielsen, that when a class-action waiver is unenforceable under Gentry, the parties have not agreed to allow class arbitration and plaintiff’s claims must be adjudicated in court.
California Court of Appeal holds trial court erred in not certifying wage and hour class action. In Bradley v. Networkers Int’l, LLC, D052365, the Court of Appeal held that the trial court erred in denying class certification with respect to plaintiffs’ claims for overtime and rest and meal break pay, but affirmed denial of class certification for claims based on alleged off-the-clock work. This case was on remand from the California Supreme Court with directions to reconsider in light of Brinker.
The employer in this case had characterized its workers as “independent contractors” but later had its workers sign “employment” agreements. The Court of Appeal stated the evidence relevant to whether the class members were employees or independent contractors was common among all class members and that the “critical fact is that the evidence likely to be relied upon by the parties would be largely uniform throughout the class.” The employer had also never promulgated any policy specifically authorizing meal and rest breaks. Originally, the trial court had denied certification and the appellate court upheld the denial on the ground that it would be necessary to individually determine which workers had the opportunity to take breaks and whether they had voluntarily chosen to waive the breaks. The Court of Appeal noted that under Brinker class certification of the meal and rest period claims was required. Brinker clarified that employers have a legal obligation to affirmatively provide breaks, and not having a policy is itself a common classwide practice that warrants class certification.
The Court of Appeal rejected the plaintiffs’ assertion that the trial court abused its discretion by failing to certify a class on their claims that the employer violated state law by requiring the workers not to record all of their work time given that the factual record did not show the employer had a uniform policy requiring each employee to work off the clock.
Class certification does not establish collateral estoppel against absent class members. In Bridgeford v. Pacific Health Corporation, Cal. App. 4th 1034, the Court of Appeal held that denial of class certification in one action does not prevent absent class members from filing a second class action making the same allegations. Bridgeford followed the U.S. Supreme Court’s lead in Smith v. Bayer Corp., 131 S. Ct. 2368 (2011). Smith held that “the unnamed putative members of a class that was never certified cannot be bound by collateral estoppel.”
Other Case Law Impacting Employers
California Supreme Court holds unions may picket on private property. In Ralphs Grocery v. United Food & Commercial Workers Union Local 8, No. S185544, the California Supreme Court held that the parking area and walkway in front of a Ralph’s grocery store’s entrance is not a “public forum” property on which picketing is protected under the California Constitution. However, the Supreme Court also held that, although the United Food & Commercial Workers Union (UFCW) could not invoke constitutional protections to justify its picketing, the UFCW could invoke the statutory protections provided by the Moscone Act and Labor Code Section 1138.1. The Moscone Act aims to promote worker rights to the collective bargaining process and to reduce judicial interference in labor disputes by providing that certain labor-dispute activities cannot be enjoined. The protected activities include “peaceful picketing or patrolling involving any labor dispute.” Section 1138.1 applies where the Moscone Act does not and prohibits injunctions unless the victim of the picketing overcomes various procedural hurdles. The Court held that both laws are constitutional even though they afford preferential treatment to speech concerning labor disputes over speech about other issues. The Court held that the labor laws allowing picketing on private sidewalks are “justified by the state’s interest in promoting collective bargaining to resolve labor disputes, the recognition that union picketing is a component of the collective bargaining process, and the understanding that the area outside the entrance of the targeted business is ‘the most effective point of persuasion.’” This decision means that it will be very difficult for California employers to obtain injunctions against union trespassers on their private property, unless the union pickets engage in unlawful activity, such as blocking ingress and egress or violence.
U.S. Supreme Court holds that an arbitrator, and not the state court, must decide the validity of a noncompete agreement. In Nitro-Lift Technologies, LLC v. Howard, 568 U. S. (2012), the U.S. Supreme Court held that the Oklahoma Supreme Court’s decision that noncompete agreements are unenforceable, despite an arbitration clause dictating that all disputes be resolved by an arbitrator, must be vacated. The Supreme Court held the state court failed to adhere to the correct interpretation of the Federal Arbitration Act. By declaring the noncompetition agreements in “two employment contracts null and void, rather than leaving that determination to the arbitrator in the first instance, the state court ignored a basic tenant of the Act’s substantive arbitration law.”
An employee’s misuse or misappropriation of information does not violate the CFAA. In United States v. Nosal, 676 F.3d 854 (2012), the Ninth Circuit held that a former employee who assists a current employee in violating the employer’s computer-use policy does not violate the federal Computer Fraud and Abuse Act (CFAA). The CFAA provides a civil remedy and criminal penalties for “exceed[ing] authorized access” of a computer. Defendant Nosal, who had worked for a recruitment firm, allegedly conspired with that firm’s current employees to gain information in order to start a competing company. The firm’s computer policy allowed access to its computer systems for official purposes only, subject to disclosure limitations. The Court held that “exceeds authorized access” in the CFAA is limited to violations of restrictions on access to information and does not extend to the misuse or misappropriation of information rightfully obtained. Because Nosal’s accomplices had permission to access the company database and obtain its information, the government’s charges failed to meet the element of “exceeds authorized access.”
Employer’s decision not to extend or renew a fixed-term employment contract will not subject employer to wrongful termination claim. In Touchstone Television Productions v. Superior Court, 208 Cal. App. 4th 676 (2012), the California Court of Appeal, reversing the trial court, held that a television studio’s decision not to exercise its option to extend an actress’ contract for an additional season was not a “termination” for purposes of asserting a claim for wrongful termination in violation of public policy. As the Court stated: “A cause of action for wrongful termination in violation of public policy does not lie if an employer decides simply not to exercise an option to renew a contract. In that instance, there is no termination of employment but, instead, an expiration of a fixed-term contract. . . . To hold otherwise would require the creation of a new tort for nonrenewal of a fixed-term employment contract in violation of public policy. We decline to do so.” The prevailing defendant in this case was represented by MSK.
Employment arbitration agreement that applies only to disputes arising out of breach of that agreement does not compel arbitration of statutory discrimination claims. In Grey v. American Management Services, 204 Cal. App. 4th 803 (2012), the California Court of Appeal reversed a judgment entered on an arbitration award, holding that the trial court should not have compelled the employee to arbitrate his claims for sexual-orientation discrimination. As part of his employment application, the employee signed an agreement containing a broad arbitration clause that encompassed all employment-related disputes. On being hired, he also signed an employment contract, which included a more limited arbitration clause and an integration clause. The Court held that the employment contract was the final expression of the parties’ agreement with respect to employment and therefore superseded the earlier agreement, in accordance with the terms of the integration clause. Given that the employment agreement’s limited arbitration agreement applied only to disputes “arising out of the alleged breach of any other provision of this Agreement,” and the plaintiff’s claims were for statutory violations, the Court held that the employee was not required to arbitrate his discrimination claim.
EEOC Developments
EEOC releases Strategic Enforcement Plan for FY 2012-2016. The EEOC released a draft of its Strategic Enforcement Plan for Fiscal Years 2012 through 2016. This plan went into effect on October 1, 2012. It describes the EEOC’s strategy for targeted enforcement and the integration of administrative and legal enforcement activities. The Plan outlines the nationwide priorities for EEOC enforcement efforts in private, state and local government, and federal sectors. These priorities include: eliminating systematic barriers in recruitment and hiring, which includes targeting not only class-based intentional hiring discrimination, but also facially neutral hiring practices that have an adverse impact on certain protected groups such as pre-employment testing, background screening, and date-of-birth screenings on Internet applications; and protecting immigrant, migrant, and other vulnerable workers by targeting practices such as disparate pay, job segregation, harassment, and trafficking, as well as policies that may include discriminatory language.
NLRB Developments
NLRB holds that employers may not ask employees not to discuss ongoing workplace investigations. In Banner Health System, 358 NLRB No. 93 (July 30, 2012), the NLRB held that an employer’s practice of asking employees not to discuss ongoing workplace investigations with their coworkers violated the employees’ Section 7 rights under the National Labor Relations Act (“NLRA”). Section 7, which applies to all employees whether or not represented by a union, protects the right of employees to engage in “concerted activities” for their mutual aid and protection. Employers who want to keep their workplace investigations confidential must now establish, at the outset of the investigation, that there is a legitimate business reason for doing so. A generalized concern with protecting the integrity of the investigation is insufficient. Before an employer may lawfully request that an investigation remain confidential, it must determine whether: (a) witnesses need protection; (b) there is a danger of evidence being destroyed; (c) there is a danger of testimony being fabricated; or (d) there is a need to prevent a “cover-up.” The employer must make such determination(s) at the outset of the investigation, which is not always easy or possible to do.
NLRB limits employer regulation of employee online speech. In Costco Wholesale Corp., 358 NLRB No. 106 (September 7, 2012), the NLRB held that a provision in Costco’s electronic communications and technology policy that prohibited employees from posting statements electronically that damage the Company, defame any individual or damage any person’s reputation, or violate the policies outlined in the Costco Employee Agreement unlawfully interfered with the employees’ Section 7 rights. The NLRB held that, although Costco’s rule did not explicitly reference protected Section 7 activity, which protects the right of employees to engage in “concerted activities” for their mutual aid and protection, the broad prohibitions against making statements that “damage the Company, defame any individual or damage any person’s reputation” clearly encompassed concerted communications. The NLRB held that, in these circumstances, employees would reasonably conclude that the rule requires them to refrain from engaging in certain protected communications. The NLRB suggested, however, that the policy would have been lawful if it were limited only to statements that were malicious, abusive, or unlawful.
NLRB finds employer “courtesy” policy violates the NLRA. In Karl Knauz Motors, Inc., 358 NLRB No. 164 (September 28, 2012), the NLRB affirmed an ALJ’s finding that a car dealership had not violated the NLRA when it discharged a salesperson for posting photographs and sarcastic remarks about a workplace accident. At the same time, however, the Board concluded that the employer had violated the NLRA by maintaining a “courtesy” policy, which the Board determined could have a “chilling effect” on employee rights. The dealership’s “courtesy” policy required employees to “be courteous, polite and friendly” and proscribed the use of “disrespectful” or profane language injurious to the “image or reputation of the Dealership.” The NLRB objected to the policy because employees could “reasonably construe its broad prohibition against ‘disrespectful’ conduct and ‘language which injures the image or reputation of the Dealership’ as encompassing Section 7 protected activity,” such as statements to “coworkers, supervisors, managers, or third parties” objecting to working conditions or seeking assistance in improving them.
NLRB clarifies that at-will provisions that do not require employees to agree that the at-will nature of their employment can never be changed or to refrain from seeking to change it are lawful. On October 31, 2012, the NLRB’s Office of the General Counsel issued two advice memoranda addressing at-will provisions in employee handbooks. Before the advice memoranda were issued, an ALJ found that an employment-at-will provision in the employee handbook of the American Red Cross unlawfully interfered with employees’ rights under the NLRA. The ALJ in that case found the statement that the at-will employment relationship could not be modified in any way violated an employee’s right under the NLRA to “advocate concertedly … to change his/her at-will status.”
Subsequently, the NLRB’s Acting General Counsel issued the two advice memoranda to provide guidance to employers about how to draft employment-at-will disclaimers without violating the NLRA. Responding to a request for advice concerning unfair labor practice charges challenging the at-will employment disclaimers of two employers, Mimi’s Café and Rocha Transportation, the Acting General Counsel concluded that both disclaimers were lawful, in part because their language did not require employees to agree that the at-will nature of their employment could never by changed or to refrain from seeking to change it.
The disclaimer in Mimi’s Café’s handbook stated that “[n]o representative of the Company has authority to enter into any agreement contrary to the foregoing ‘employment at will’ relationship.” The NLRB’s Acting General Counsel found this language simply clarified that the employer’s representatives are not authorized to change the at-will nature of the employment.
The language in Rocha Transportation’s handbook was similar, stating that “[n]o manager, supervisor, or employee of Rocha Transportation has any authority to enter into an agreement for employment for any specified period of time or to make an agreement for employment other than at-will. Only the president of the Company has the authority to make any such agreement and then only in writing.” Like the language in Mimi’s Café’s handbook, this language clarified that certain employees could not change the at-will nature of the employment. This provision, however, explicitly stated the president of the company could change the at-will nature of the employment if he/she did so in writing. Significantly, the Acting General Counsel found no language in either of the at-will provisions that required employees to refrain from seeking to change their at-will status or to agree that their at-will status could never be changed.
NLRB holds union dues checkoff continues after contract expiration. In WKYC-TV Inc., 359 NLRB No. 30 (December 12, 2012), a divided NLRB held that an employer’s obligation to check off union dues from employees’ wages continues after expiration of a collective-bargaining agreement that establishes such an arrangement. The majority stated that this obligation continues until “the parties have either reached agreement or a valid impasse permits unilateral action by the employer.” The majority wrote that the Bethlehem Steel decision, 136 NLRB 1500, 50 LRRM 1013 (1962), and its progeny, which established that an employer’s obligation to check off dues terminates upon expiration of a contract, “should be overruled to the extent they stand for the proposition that dues checkoff does not survive contract expiration under the status quo doctrine.” The majority stated that an employer’s obligation to honor dues checkoff arrangements post-contract expiration is consistent with “the language of the Act, its relevant legislative history, and the general rule against unilateral changes to terms and conditions of employment.”
This decision overturns a policy that has existed for some 50 years. The majority stated that, because employers have relied on the former policy, the new policy will be applied prospectively and not in pending cases.
NLRB requires balancing of employer confidentiality interests and a union’s need for information concerning employee discipline. In American Baptist Homes of the West d/b/a Piedmont Gardens, the NLRB held that employers are no longer automatically exempted when unions ask them to turn over witness statements related to employee discipline. Now the Board will balance the confidentiality interests of the employer against the union’s need for the information. This decision overruled a 1978 NLRB decision, Anheuser-Busch, Inc., 237 NLRB 982, which established a categorical exemption for witness statements in such cases. The Piedmont Gardens case involved a continuing-care facility in Oakland, California, where statements by two witnesses alleging that a certified nursing assistant was asleep on the job resulted in that person’s termination. The union representing employees at the facility, SEIU, United Healthcare Workers-West, asked for information used in the termination, including witness statements, but the employer refused.
In its decision, the Board noted that the National Labor Relations Act imposes on an employer a “general obligation” to furnish a union with relevant information necessary to perform its duties. However, the Board must balance that need against “any legitimate and substantial confidentiality interests established by the employer.” The NLRB also decided not to apply the new rule retroactively.
NLRB holds that comments about co-worker posted on social media are protected. In Hispanics United of Buffalo, Inc., 359 NLRB No. 37, the NLRB found that Hispanics United of Buffalo (“HUB”), a New York nonprofit, social service organization, violated the NLRA by firing five non-union employees who had posted negative comments about a co-worker and their jobs on Facebook. After learning that the co-worker, Lydia Cruz, had complained about the job performance of several employees and had expressed her intent to take the complaints to management, one of those employees posted the following statement on her personal Facebook page:
Lydia Cruz, a coworker feels that we don’t help our clients enough at HUB[.] I about had it! My fellow coworkers how do u feel?
In response, several employees shared on Facebook their negative opinions about Cruz and Cruz’s criticisms, as well as various aspects of their jobs, including workloads and staffing. None of the employees posted their comments during work time, and none of them used a work computer. The employer discharged the employees for harassing and bullying Cruz in violation of the employer’s anti-harassment policy.
In analyzing whether social media comments are entitled to protection under the NLRA, the NLRB held that the same analytical framework that applies to oral communications among co-workers should be applied to comments made by workers using social media. Under this standard, employees’ conduct is “protected concerted” activity if it is “engaged in with or on the authority of other employees” and concerns employment terms and conditions.
The NLRB held that the terminations were unlawful because the Facebook “conversation” was protected by the NLRA. The NLRB found that the employees’ comments were the first step toward taking group action to defend themselves against accusations about their performance that they believed Cruz was going to make to management. Additionally, the Board reasoned that that comments did not rise to the level of harassment and bullying that was banned by the employer’s policy. That policy, which prohibited harassment based on protected characteristics such as race and gender, was not violated because there was no evidence that Cruz was harassed due to any such protected characteristic.
Miscellaneous Developments
Employers should prepare for on-site visits by USCIS. The U.S. Citizenship and Immigration Services (“USCIS”) has increased its antifraud staff with contractor inspectors to perform thousands of on-site visits to U.S. companies that employ foreign workers under H-1B and L-1 visas. These on-site inspections illustrate the U.S. Department of Homeland Security’s new attitude and enforcement efforts focusing on employer prosecution for noncompliance with U.S. immigration laws. The USCIS wants to confirm that the H-1B or L-1 foreign worker is actually working for a bona fide U.S. employer in the position and location and earning the salary stated in the corresponding petition filed with the USCIS.
Pending Decisions And Potential Legislation
California Supreme Court
The California Supreme Court granted review in Iskanian v. CLS Transportation Los Angeles, LLC, S204032, to decide whether AT&T Mobility LLC v. Concepcion 131 S. Ct. 1740 (2011), impliedly overruled Gentry v. Superior Court, 42 Cal. 4th 443 (2007), which held that class waivers in arbitration agreements should not be enforced if class arbitration would be a significantly more effective way of vindicating the rights of affected employees than individual arbitration. The Court will also decide whether arbitration agreements can override the statutory right to bring representative claims under the Labor Code Private Attorneys General Act of 2004 (“PAGA”).
The California Supreme Court granted review in Sanchez v. Valencia Holding Co. LLC, S199119, which includes the following issue: Does the Federal Arbitration Act (9 U.S.C. § 2), as interpreted in AT&T Mobility LLC v. Concepcion, preempt state law rules invalidating mandatory arbitration provisions in a consumer contract as procedurally and substantively unconscionable?
The California Supreme Court granted review in Mayers v. Volt Management, 203 Cal. App. 4th 1194 (2012), review granted, 142 Cal. Rptr. 3d 807 (2012). In Mayers, the California Court of Appeal affirmed the trial court’s denial of the employer’s petition to compel arbitration and found the employer’s arbitration agreement unconscionable. The Court of Appeal held that the Federal Arbitration Act and AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), did not prevent it from analyzing the arbitration agreement for unconscionability. The Supreme Court has deferred briefing in this case pending its decision in Sanchez v. Valencia Holding Co. LLC discussed above.
On December 4, 2012, the California Supreme Court heard oral arguments in Harris v. City of Santa Monica, S181004, in which the Court will decide whether the “mixed-motive” defense applies to employment-discrimination claims under the FEHA. That defense permits an employer to assert that it would have made the same personnel decision even in the absence of the alleged discriminatory motive.
Wisdom v. AccentCare, Inc., 202 Cal. App. 4th 591 (2012) (No. S200128, review granted 3/28/12), has been fully briefed. The California Supreme Court granted review to determine whether an arbitration clause in an employment application that provides “I hereby agree to submit to binding arbitration all disputes and claims arising out of the submission of this application” is unenforceable as substantively unconscionable for lack of mutuality, or whether the language creates a mutual agreement to arbitrate all such disputes.
Salas v. Sierra Chem. Co., 198 Cal. App. 4th 29 (2011) (No. S196568, review granted 11/16/11), has been fully briefed. The California Supreme Court granted review to determine whether the after-acquired evidence doctrine bars the contention that the employer would have refused to hire the employee had it known that he used a counterfeit Social Security number at the time of hire.
County of L.A. v. Los Angeles Co. Emp. Relations Comm’n, 192 Cal. App. 4th 1409 (2011) (No. S191944, review granted 6/15/11), has been fully briefed. The California Supreme Court granted review to analyze the following issues: (1) Under the California Constitution, do the interests of non-union-member public employees in the privacy of their personal contact information outweigh the interests of the union representing their bargaining unit in obtaining that information in furtherance of its duty to provide fair and equal representation of union-member and non-union-member employees within the bargaining unit? (2) Did the Court of Appeal err in remanding to the trial court with directions to apply a specific notice procedure to protect such employees’ privacy rights instead of permitting the parties to determine the proper procedure for doing so?
In Duran v. U.S. Bank Nat’l Ass’n, 137 Cal. Rptr. 3d 391 (2012) (No. S200923, review granted 5/16/12), the Court of Appeal reversed a trial court judgment in favor of a class of bank officers and ordered the class decertified. The Supreme Court granted review and stated that the issues in the case are the “certification of class actions in wage and hour misclassification litigation and the use of representative testimony and statistical evidence at trial of such a class action.”
Federal Court
U.S. Supreme Court: U.S. Airways v. McCutchen. In U.S. Airways v. McCutchen (Case No. 11-1285), the Supreme Court will decide whether the Third Circuit correctly held – in conflict with the Fifth, Seventh, Eighth, Eleventh, and D.C. Circuits – that Section 502(a)(3) of the Employee Retirement Income Security Act (ERISA) authorizes courts to use equitable principles to rewrite contractual language and refuse to order participants to reimburse their plan for benefits paid, even where the plan’s terms give it an absolute right to full reimbursement.
5th Circuit: D.R. Horton, Inc. v. National Labor Relations Board, No. 12-60031. The NLRB’s decision in D.R. Horton (discussed above) has been appealed to the U.S. Court of Appeals for the Fifth Circuit and, ultimately could be headed for the U.S. Supreme Court. The NLRB has consistently held that it is not bound by U.S. Court of Appeals decisions, only by U.S. Supreme Court decisions and previous NLRB decisions. Therefore, while the Fifth Circuit may decide the case in D.R. Horton’s favor, that may not necessarily end litigation over this issue. The validity of class-action waivers in arbitration agreements will be before the courts for a good while. Employers who hope to compel the resolution of disputes with their employees through arbitration should do so with the guidance of counsel.
Potential Legislation
Expansion of CFRA held under submission. AB 2039, a bill that could significantly expand the California Family Rights Act (CFRA), is being held under submission in the California Senate so its fiscal impact may be studied. Under CFRA, an employer with 50 or more employees must permit an eligible employee to take up to 12 weeks of leave in a 12-month period to care for the serious medical condition of a child (under 18 years of age or adult dependent), spouse, or parent. The current definition of “parent” includes stepparents and individuals who act as a parent (“in loco parentis”) to the child. AB 2039 would expand the circumstances under which CFRA leave may be taken by (1) eliminating current age and dependency requirements for children, thereby permitting an employee to take leave to care for an adult child; (2) expanding the definition of “parent” to include parents-in-law; and (3) permitting an employee to take leave to care for a grandparent, sibling, or grandchild. The bill also clarifies that employees have the same rights to care for a seriously ill domestic partner as they do for a seriously ill spouse.
