Articles Discussing General Workplace Issues in California.

Recently, the Los Angeles City Council approved a motion to amend the Living Wage Ordinance (LWO) and the Hotel Worker Minimum Wage Ordinance (HWMO),

In this episode, Jen discusses her year-end checklist to ensure you are prepared for 2025.

By: Good News for Employers: California Enforces Arbitration Agreement In Favor of Non-Signatory Related Entities

By: Good News for Employers: California Enforces Arbitration Agreement In Favor of Non-Signatory Related Entities

Frequently, employment arbitration agreements are written with the intent to apply to future disputes between an employee, the employer and the employer’s parent and sister companies.

Employers and third parties can breathe easier after the California Court of Appeal held that employees who sign an arbitration agreement cannot avoid arbitration by suing related entities and arguing that arbitration does not apply because the third-parties were not signatories to the agreement. Edgar Gonzalez v. Nowhere Beverly Hills LLC, B328959 recently upheld this notion which had been put in question by another case earlier this year.

In Edgar Gonzalez v. Nowhere Beverly Hills LLC, a former employee filed a wage and hour class action lawsuit against his former employer, Nowhere, and eight other related entities based on a joint employer theory. The Plaintiff conceded that he signed an arbitration agreement and argued that the agreement did not apply to the non-signatory related entities. The trial court ordered the claims against Nowhere to arbitration but denied arbitration for the related entities on the grounds that they were not signatories to the arbitration agreement. Gonzalez then strategically dismissed Nowhere from the case to proceed against the related entities. The defendants appealed.

The Court of Appeal reversed the trial court’s order, holding that the employee’s claims based on a joint employer theory were closely related to the employment between Gonzalez and Nowhere, including the agreement to arbitrate. The Court reasoned that he could not seek to impose liability on the related entities based on a joint employer theory while simultaneously denying that a joint employment relationship did not also apply to arbitration. The Court concluded that the key factor to reaching its decision to enforce the arbitration agreement is the nexus between the claims against the non-signatories and the underlying employment agreement between the plaintiff and the actual employer, regardless of which entity expressly signed the arbitration agreement. A clear nexus existed because the plaintiff alleged a joint employer liability theory from the outset. California employers may take comfort that employment arbitration agreements should be enforced in favor of related parties arising from claims based on an employee’s employment.  

To further complicate matters, new laws set to take effect in 2025 will reshape arbitration in California. SB 365 will allow cases to proceed through the trial process even where a party appeals an order denying a petition to compel arbitration. Additionally, SB 940 will permit the issuance of subpoenas to third parties during the discovery phase of arbitration, broadening the scope of all parties to obtain discovery in the arbitration space. 

However, because there is a split of authority over the enforceability of arbitration agreements to related parties, the California Supreme Court will be more interested in visiting this issue. CDF will update our readers with developments as they unfold.

Employers should work with their counsel to consider utilizing arbitration agreements with their employees, and those who currently utilize arbitration agreements should revisit existing arbitration agreements to keep up with ever-changing California labor law and optimize enforceability. Feel free to contact Dan or Linda or your favorite CDF attorney for a consultation.

By: Top Five 2025 California Privacy Alerts for California Employers

Employers must prepare for significant amendments to the California Consumer Privacy Act (CCPA) of 2018, as amended by the CPRA (CCPA) in 2025. The CCPA grants California residents, including employees, specific rights relating to collecting and using their personal information. These changes include amendments to key definitions, application of data privacy rules to artificial intelligence (AI), and heightened regulatory oversight and enforcement. Outlined below are the top five developments that California employers should anticipate for2025: 

1. AB 1008: CCPA now expressly covers generative AI systems. The definition of “personal information” (PI) expands to PI located in various formats, including AI systems. If an AI system is capable of exposing PI—such as names, addresses, or biometric data—businesses will be subject to restrictions on how they may use or profit from that data. The Legislature’s goal is to ensure that AI systems adhere to the same privacy protections that govern other forms of data storage, processing, and use.
    
2. SB 1223: The CCPA’s definition of “sensitive personal information” is expanded to include a consumer’s neural data—information generated by measuring the activity of a consumer’s central or peripheral nervous system. 
    
3. AB 1824: In 2025, a business that receives the consumer’s PI as part of a merger, acquisition, bankruptcy or other transaction must expressly comply with a consumer’s opt-out preferences.
    
4. Increased Enforcement Activity: The Privacy Police have stepped up the enforcement of the CCPA in recent years. After issuing its first enforcement action under the CCPA in 2022, several new enforcement actions against a variety of businesses for their use and disclosure of PI have been publicized. In 2024, the Privacy Police issued a $6.75 million fine against a cloud software company relating to a 2020 ransomware attack that resulted in California consumers’ PI theft. They also announced a stipulated judgment with a mobile app developer relating to collecting and sharing children’s data without parental consent. These actions show an increased focus on privacy and a willingness to go after companies who fail to take proper safeguards to protect PI. 
    
5. New CPPA Regulations: The California Privacy Protection Agency (CPPA) published a set of draft regulations for public comment. Though too voluminous to discuss at length, the regulations primarily seek to update existing regulations, implement requirements for businesses to conduct cybersecurity audits, risk assessments, and implement consumers’ rights to opt out of automated decision-making technology (ADMT). These regulations could go into effect on April 1, 2025, following public comment period and potential changes. 

CDF’s Privacy Practice Group will continue to monitor developments related to privacy issues and the CCPA, the CPRA, and the California Privacy Protection Agency’s enforcement actions. Please get in touch with a member of CDF’s Privacy Practice Group (Dan Forman, Dalia Khatib, Linda Wang, or Chris Dawood) to discuss compliance with privacy laws, any investigation by the California Privacy Protection Agency, or any questions about the CCPA & CPRA. Our Privacy Practice Group is available to assist with policies, notices, general compliance for employers, and defense of investigations and litigation.

California’s employment landscape can feel like a “riddle wrapped in a mystery inside an enigma.” 

Prohibition on Driver’s License Requirement in Hiring Decisions As we mentioned in an earlier blog post, SB 1100, which takes effect on January 1, 2025, makes it an unlawful employment practice for employers to include a

By: New California Laws Regulating Privacy and Artificial Intelligence

In September, Gavin Newsom signed a host of new legislation into law, including two bills – AB 3030 and SB 1223, designed to help regulate health data and generative AI in the healthcare space. 

SB 1223 is a less highlighted bill that simply modifies the California Consumer Privacy Act’s (CCPA) definition of sensitive personal information to now include “neural data,” also known as “information generated by measuring the activity of a consumer central or peripheral nervous system, and that is not inferred from nonneural information.” Essentially, this bill expands the protections for individual’s private health care data by adding protections for neural data, which is information received directly from a person’s body. 

The second bill, AB 3030, seeks to regulate generative AI which is a form of AI that “can generate derived synthetic content, including images, videos, audio, text, and other digital content.” Essentially, this type of AI is trained to create new data. This new bill seeks to strike a balance in the healthcare field by allowing the use of generative AI while also putting protective measures in place. The bill’s author believes that generative AI in healthcare can help transform medical research, patient care, and diagnosis. 

This bill applies only to health facilities, clinics, physician’s offices, or offices of group practice that utilize this technology to create verbal or written patient communications about patient’s clinical information. 

If one of the designated facilities utilizes this technology, it must include a disclaimer to inform the patient that the communication was created using generative AI. Not only is the use of a disclaimer required, but the communication must also include clear instructions on how a patient can contact a human health care provider or employee of the applicable facility. The only exception to needing the disclosure and clear instructions is if the communication prepared by the generative AI is read and reviewed by a human licensed or certified health care provider. This bill’s purpose appears to be that patients understand that these messages, whether audio, visual, or written, are created by generative AI and not a real person. This bill follows the trend of creating more regulations and transparency surrounding the use and implementation of AI.

Overall, AB 3030 follows the recent trends of creating new regulations surrounding the use of AI. 

By: California Court of Appeal Supports Employers’ Fight Against “Headless” PAGA Actions

In 2022, the U.S. Supreme Court published its decision in Viking River Cruises v. Moriana (Viking River), which was hailed as a “Big Win for California Employers.” The decision allowed for partial enforcement of arbitration agreements in actions brought under California’s Private Attorneys General Act (PAGA). The celebration of the “Big Win” was short-lived as the fight over the enforceability of arbitration agreements in PAGA actions continued immediately after Viking River was decided.

Recently, PAGA plaintiffs began implementing a new anti-arbitration strategy wherein they attempted to bring a representative PAGA action that purportedly excluded the arbitrable portions of a PAGA action. Specifically, the PAGA plaintiffs assert that their representative PAGA action is solely based on alleged Labor Code violations against other, non-party employees. The PAGA plaintiff asserts that their PAGA action includes no arbitrable individual claim and that they seek no individual relief. Given the purported absence of claims by the plaintiff, these actions have been referred to as “headless” PAGA actions. And plaintiffs argue that these “headless” PAGA actions are immune from arbitration. 

Unfortunately, some trial courts have allowed PAGA plaintiffs to avoid arbitration and maintain “headless” PAGA actions in court. And the trend is gaining momentum. Bloomberg Law recently published an article about this anti-arbitration litigation tactic, titled “California Workers Try to Avoid Arbitration With ‘Headless PAGA,” [subscription required] explaining that over one-third of the PAGA actions filed in Los Angeles County over the past six months have been “headless” PAGA actions.

Plaintiffs purporting to have a “headless” PAGA action rely heavily on the Second District Court of Appeal decision in Balderas v. Fresh Start Harvesting, Inc. (Balderas). In Balderas, the plaintiff’s complaint asserted that she “is not suing in her individual capacity; she is proceeding herein solely under the PAGA, on behalf of the State of California for all aggrieved employees, including herself and other aggrieved employees.” The appellate court held “that an employee who does not bring an individual claim against her employer may nevertheless bring a PAGA action for herself and other employees of the company.”

If the Balderas decision stopped there, it would have been rather ordinary. One would reasonably construe the holding as a recitation of the long-held rule that an aggrieved employee has standing to maintain a PAGA cause of action even if they have no valid individual Labor Code cause of action. 

However, in dicta, Balderas states that the legislature extended “broad standing to aggrieved employees who do not depend on the viability or strength of a plaintiff’s individual PAGA claim. The inability for an employee to pursue an individual PAGA claim does not prevent that employee from filing a representative PAGA action.” The “headless” PAGA actions arose from these statements, which support the proposition that a plaintiff can maintain a representative PAGA action (i.e., a cause of action for civil penalties under PAGA) without asserting an arbitrable individual PAGA claim. 

Fortunately, though, the same Court of Appeal that decided Balderas recently published a decision with a holding that is entirely inconsistent with the dicta in Balderas. 

In Rodriguez v. Lawrence Equipment, Inc. (Rodriguez), the Second District Court of Appeal held that an arbitrator’s final adjudication of non-PAGA Labor Code claims has a preclusive effect on a related PAGA action. The plaintiff in the case, Rodriguez, unsuccessfully arbitrated his individual Labor Code causes of action, failing to establish that he suffered any Labor Code violations. After arbitration, Rodriguez sought to prosecute his representative PAGA action in court but the trial court dismissed Rodriguez’s PAGA action for lack of standing. The appellate court affirmed, concluding that “Rodriguez is precluded from relitigating the Labor Code violations in an attempt to establish he is an aggrieved employee,” and he “thus lacks standing to pursue the PAGA cause of action.”

The holding in Rodriguez is entirely inconsistent with the Balderas dicta that supports “headless” PAGA claims. Under Rodriguez, “the inability for an employee to pursue an individual PAGA claim” does eliminate that employee’s standing to maintain a PAGA action. Under Rodriguez, standing under PAGA does “depend on the viability or strength of a plaintiff’s individual PAGA claim.” 

Rodriguez will not stop PAGA plaintiffs from relying on Balderas to justify their “headless” PAGA actions. But their reliance is on shaky ground. The Rodriguez decision should help employers fight back against “headless” PAGA actions and successfully enforce their arbitration agreements under Viking River. It is also important that employers distinguish Balderas to ensure its holding is appropriately limited. Employers should also ensure that they use “PAGA claim” and “PAGA action” precisely and consistent with Viking River. And, further, they should be vigilant of how PAGA plaintiffs rely on pre-Viking River PAGA decisions to support their arguments to oppose arbitration pursuant to Viking River. Some of the focal points are set forth below.

• Balderas merely determined whether allegations were sufficient to overcome a motion to strike a complaint, and Balderas’ complaint alleged that she sought to recover civil penalties under PAGA “for all aggrieved employees, including herself and other aggrieved employees.” Balderas’ PAGA action was not purely representative, limited to “non-individual PAGA claims” brought solely on behalf of other aggrieved employees, and excluding claims on behalf of Balderas herself.
   
• Viking River “use[d] ‘individual PAGA claim’ to refer to claims based on [Labor C]ode violations suffered by the plaintiff.” In Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, the California Supreme Court “use[d] the terms ‘individual’ and ‘non-individual’ claims in accordance with the high court’s usage in Viking River.” Under both decisions, “individual PAGA claims” are subject to arbitration. A plaintiff’s claim that they are an “aggrieved employee” under PAGA is a claim that the plaintiff suffered Labor Code violations. Thus, all PAGA plaintiffs claiming to have standing as an “aggrieved employee” are asserting an “individual PAGA claim” that is arbitrable under Viking River.
   
• Before Viking River was decided, the California Supreme Court decided Kim v. Reins Int’l California, Inc. (2022) 9 Cal.5th 73, explaining that “[t]here is no individual component to a PAGA action” and thus California courts routinely “reject[] efforts to split PAGA claims into individual and representative components” through an arbitration agreement, or otherwise. Viking River held that “the FAA preempts the [California] rule [that] precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate.” No legal authority suggests that a PAGA plaintiff who agreed to arbitrate their individual PAGA claims may avoid such arbitration by filing a “headless” PAGA action. Absent the agreement to arbitrate under the FAA, PAGA actions may not be split in that manner. 
   
• PAGA plaintiffs cannot avoid arbitration by declining to seek any civil penalty for themselves because PAGA authorizes “a civil penalty to … be recovered through a civil action brought by an aggrieved employee on behalf of the employee and other current or former employees,” and PAGA requires that the court distribute the civil penalty “to the aggrieved employees.” PAGA plaintiffs have no say in the matter. Moreover, California law requires arbitration of “any question arising between parties to an agreement whether the question is one of law or of fact or both.” A PAGA plaintiff’s claim that they are an aggrieved employee is a question of fact which, under Viking River and Adolph, must be bifurcated and compelled to arbitration. That is so even if the PAGA plaintiff could feasibly disclaim any individual relief.

The fate of “headless” PAGA actions will likely be determined next year, as it is expected that California appellate courts will begin to decide PAGA cases that are currently on appeal following the denial of motions to compel arbitration of “individual PAGA claims.” 

For example, Garcia v. Omni Hotels Management Corporation (Garcia), Case No. D084151, arose from a trial court’s order denying an employer’s motion to compel arbitration in a PAGA action because, the trial court found, “there is nothing to order to arbitration if Plaintiff is not seeking any [civil penalties] based on violations that occurred as to them.” That appeal is fully briefed before the Fourth District Court of Appeal. 

California Captive Audience Ban At the end of September, Governor Newsom signed SB 399, the California Worker Freedom from Employer Intimidation Act (“Act”), which was discussed in this blog post. This new law, which will take