Today the U.S. Supreme Court issued its opinion in DirectTV v. Imburgia, reversing a California Court of Appeal’s refusal to enforce a consumer arbitration agreement containing a class action waiver. The case involves a service agreement between DirectTV and its consumers, stating that any dispute between DirectTV and the consumer will be resolved by binding, individual arbitration and that the consumer waives the right to pursue any claim on a class basis. However, the agreement further provided that if the class waiver is unenforceable under “the law of your state” (the state where the consumer resides), then the entire arbitration provision will be deemed unenforceable.
Two new employment decisions were issued today, one by a California Court of Appeal and the other by the Ninth Circuit. In Prue v. Brady Company, the California court held that a plaintiff who suffered a work-related injury and subsequently was fired stated a valid legal claim against the employer for wrongful termination in violation of public policy. The employer argued that the plaintiff’s claim was invalid because it effectively was a Labor Code section 132a retaliation claim that could only be brought before the Workers’ Compensation Appeals Board, not in court. The court disagreed, reasoning that the plaintiff adequately alleged that he was wrongfully terminated for having a disability, in violation of the public policy of the Fair Employment and Housing Act, and therefore the claim was not barred by the doctrine of workers’ compensation exclusivity. The employer argued that even if the claim was based on the public policy of FEHA, the claim would be barred by the one-year statute of limitations applicable to FEHA claims. The court rejected this argument as well, ruling that a wrongful termination in violation of public policy claim is governed by a two-year statute of limitations and not by the statute of limitations applicable to FEHA claims. This decision is not particularly novel, but is a good reminder for employers that employees who believe they have been fired for reasons relating to a work comp injury can sue their employer in court and seek punitive damages (under a disability discrimination theory) and are not limited to the remedies set forth in Labor Code 132a.
The concept of wellness programs is relatively simple. Employers provide incentives to promote health or disease prevention amongst their employees. However, a variety of laws exist in order to strike a balance between incentivizing health and protecting an individual’s confidential medical information.
On October 27, the Sacramento City Council, by a 6-3 vote, passed an ordinance that will raise the minimum wage to $12.50 in gradual increments. The new city minimum wage will provide for citywide minimum wages for most businesses as follows:
On October 21, 2015, the California Supreme Court ordered the publication of SingerLewak LLP v. Gantman underscoring the importance of utilizing arbitration agreements to enforce what a California court might consider to be an unenforceable covenant-not-to compete.
Earlier this week, a California Court of Appeal issued its published opinion in Garrido v. Air Liquide Industrial U.S., holding that a class action waiver in an employment arbitration agreement was unconscionable and unenforceable. You’re thinking, "Wait, I thought the California Supreme Court ruled in Iskanian that class action waivers are enforceable." Well, you are right, but this court found a way around Iskanian.
We previously reported on several employment-related bills passed by California’s Legislature and signed by the Governor. These include AB 304 (which clarifies certain aspects of the state paid sick leave law), AB 1506 (which provides a limited right to cure certain wage statement violations), SB 327 (which clarifies the law surrounding meal period waivers in the health care industry), SB 358 (which strengthens laws against wage differentials on gender lines), and AB 622 (which provides a private right of action for misuse of E-Verify). Yesterday was the last day for the Governor to sign or veto bills so we are now reporting on the outcome of other employment bills that were passed by the Legislature this term.
On October 9, 2015 Governor Jerry Brown signed Assembly Bill 622 into law. AB 622 expands the definition of an unlawful employment practice to include the misuse of the E-Verify system. The new law prohibits employers from using the E-Verify system to inquire on the employment authorization status of an employee outside of the time and manner permitted under federal law. Additionally, employers that use E-Verify are now required to give employees copies of the derogatory notices issued to the employer from E-Verify. This new law provides for a civil money penalty of up to $10,000 per occurrence.
As California’s current legislative process heads into its final days, we have a few updates on employment-related matters relating to paid sick leave, wage statement violations, meal period waivers in the health care industry, and the Fair Pay Act.
The Ninth Circuit issued a surprising decision (disagreeing with the view of many California district courts), holding that the California Supreme Court’s Iskanian v CLS Transportation decision is not preempted by the Federal Arbitration Act (FAA). In Iskanian, the California Supreme Court held that while class action waiver provisions in arbitration agreements are enforceable, a PAGA representative action waiver is not enforceable because employees have an unwaivable statutory right to bring a representative PAGA claim against their employers. The California Supreme Court reasoned that a PAGA plaintiff essentially stands in the shoes of the state in bringing the claim and acts in large part to collect penalties on behalf of the state. In this way, the intent of the statute would be frustrated if employees could be required to waive the right to pursue a representative PAGA action. The Court further held that the FAA does not require that California enforce a PAGA waiver in an arbitration agreement.
The Immigration and Nationality Act permits employers to petition for their employees who are “Persons of Extraordinary Ability” to immigrate to the United States. For approval of a Person of Extraordinary Ability petition, the employer must demonstrate their employee’s extraordinary ability in the sciences, arts, education, business, or athletics through sustained national or international acclaim in the field of employment.
This week, California’s Governor signed into law urgency legislation passed by the legislature (AB 304) to amend California’s recently enacted paid sick leave law. These amendments take effect immediately and are intended to clarify some areas of ambiguity in the law as originally enacted. While the amendments do provide clarification in some areas, they nonetheless create added confusion and burden for employers that have already adopted or modified paid time off policies to take effect July 1, 2015, based on their best interpretations of the paid sick leave law in its originally enacted form. The amendments also leave a number of ambiguities in the original law unanswered. Click on the link to read the full summary of the amendments.
This week, the Department of Labor announced proposed changes to the white-collar overtime exemptions under the Fair Labor Standards Act (“FLSA”). If enacted, these changes will significantly impact employers.
Next week, on July 3, 2015 the ordinances collectively known as the “Retail Workers Bill of Rights” – passed unanimously by the San Francisco Board of Supervisors in November 2014 – will go into effect in the City of San Francisco and the City will begin enforcing its provisions. The ordinances require the covered employers to ensure that they meet five major requirements.
The recent published decision issued by the Fourth District California Court of Appeal (May 28) in Verdugo v. Alliantgroup, L.P. will make it more difficult for out-of-state employers to enforce forum selection and choice-of-law clauses in litigation with their California employees. The defendant, Alliantgroup, is a tax consulting firm headquartered in Texas, with one of its eleven regional offices in California. The plaintiff, Rachel Verdugo, brought a class action against the company on behalf of past and present employees, alleging various hour and wage claims under the California Labor Code. Upon being hired to work at Alliantgroup’s Irvine office, Verdugo signed an employment agreement that included a forum selection clause stating that Harris County, Texas would be the exclusive forum for disputes arising out of the agreement. The employment agreement also included a choice-of-law clause, designating Texas law as governing any arising disputes.
California courts have traditionally held that they will not defer to a selected forum if doing so would violate public policy by diminishing the rights of California residents. Furthermore, the courts have established that if the claims at issue are based on rights that California statutes have deemed “unwaivable,” the party seeking to enforce the forum selection clause bears the burden of showing that enforcement will not diminish the substantive rights afforded under California law in any way. In making certain rights “unwaivable,” the California legislature and courts are primarily concerned with providing California residents with all of the protections they are entitled to under California law. In Verdugo, the court ruled that California Labor Code rights are unwaivable. In applying this rule, and the applicable precedent, the Court of Appeal held that defendant Alliantgroup could not enforce the forum selection clause or the choice-of-law provision in the agreement because it failed to show that the forum selection and choice-of-law clauses would not diminish plaintiff Verdugo’s statutory rights by requiring her to litigate her claims in Texas and under Texas law. The court did not create a specific test for determining whether deferring to a forum selection clause will diminish an employee’s rights under the Labor Code.
Although it does not make forum selection and choice of law clauses per se unenforceable, the holding in this case is significant because it places the burden on the employer to show that application of the forum and/or choice of law clause will not diminish the employee’s rights.