On September 24, 2019, the U.S. Court of Appeals for the Ninth Circuit certified to the Supreme Court of California the question of whether that court’s landmark 2018 decision in Dynamex v. Superior Court should be applied retroactively. In May 2019, the Ninth Circuit, in Vazquez v. Jan-Pro Franchising International, Inc., held that Dynamex had retroactive effect; in July 2019, however, the appeals court withdrew that opinion and indicated that it would instead ask the California Supreme Court to decide this state-law matter.
Articles Discussing Human Resource Issues In California.
Easily “Shocked”? At Least for Wage Claims, California Supreme Court Lowers Standard for Unconscionability in Arbitration Agreements
In OTO, L.L.C. v. Kho, the California Supreme Court refused to enforce an employee’s arbitration agreement on the basis that it was unconscionable. Unconscionability has long been a common-law defense to contract enforcement. What makes OTO v. Kho problematic for employers is the court’s weakening of the traditional “Does the agreement shock the conscience?” standard. The court in this case invalidated the agreement because arbitration was a less affordable and less accessible dispute resolution mechanism than other potentially applicable state law mechanisms. Specifically, the court found the parties’ arbitration procedure to be less advantageous to the employee in the resolution of his wage claims than the “Berman” procedure, an administrative process through which an employee can receive substantial assistance in taking his wage claims before the state Labor Commissioner.
Lessons in Drafting and Implementing an Enforceable Mandatory Arbitration Agreement
Recently, the California Supreme Court invalidated a mandatory arbitration agreement in OTO, LLC v. Kho (August 29, 2019) finding the agreement was both procedurally and substantively unconscionable. The case involved arbitration of a former employee’s wage claims. Under California law, employees have access to an inexpensive administrative process to pursue wage disputes. The Court previously had ruled that an arbitration agreement is not categorically unconscionable solely because it entails a waiver of that administrative process. An agreement to arbitrate wage claims can be enforceable so long as it provides an accessible and affordable process for resolving those disputes.
Ninth Circuit to Ask California Supreme Court to Decide Retroactivity of ‘ABC’ Test, Withdraws Opinion
Whether California’s recently adopted “ABC” test, used in the employee-versus-independent contractor analysis in cases involving California’s wage orders, must be applied retroactively should be decided by the California Supreme Court, a panel of the U.S. Court of Appeals for the Ninth Circuit has decided, withdrawing its controversial May 2, 2019, opinion. Vazquez v. Jan-Pro Franchising Int’l, Inc., 2019 U.S. App. LEXIS 21687 (9th Cir. July 22, 2019). The Ninth Circuit said it will certify that question to the California Supreme Court.
California Enforces Arbitration Agreement with Staffing Agency in Favor of Worksite Employer
An employer successfully compelled arbitration under an arbitration agreement that the plaintiff-workers had with their staffing agency, even though the staffing agency was not a defendant in the lawsuit.
California Expands Upon Lactation Accommodation Requirements
California Governor Jerry Brown signed into law Assembly Bill 1976, expanding California employer obligations respective to employee lactation accommodation.
California Governor Vetoes Bill Prohibiting Mandatory Arbitration Provisions in Employment Contracts
In a last-minute action on the September 30 legislative deadline, California’s Governor vetoed a bill that, among other things, would have imposed restrictions on the use of arbitration agreements for certain employment claims.
California Supreme Court Applies “ABC” Test When Assessing Independent Contractor Status
The California Supreme Court, in Dynamex Operations v. Superior Court, held that for purposes of claims under the California Wage Orders “engage, suffer or permit to work” determines employee status, thus requiring a defendant who disputes that a worker is an employee (rather than an independent contractor) to prove (A) the worker is free from control and direction of the hirer in connection with performing the work, both under contract and in fact; (B) the worker performs work outside the usual course of the hiring entity’s business; and (C) the worker customarily engages in an independently established trade, occupation, or business of the same nature as the work performed for the hirer.
California Announces a New Wage and Hour Independent Contractor Test
In a groundbreaking new decision, the California Supreme Court announced a significant change in independent contractor law, adopting a modified “ABC” test for determining whether an individual is an employee under the Wage Orders.1 This new independent contractor test is modeled on Massachusetts’ independent contractor statute, which has been considered the strictest in the country.
California Appellate Court Rejects Legislative Attempt to Circumvent Federal Arbitration Act on Claims Involving the Ralph Act and Bane Act
In Saheli v. White Memorial Medical Center (B283217, Cal. Ct. App., March 14, 2018), the Court of Appeal for the Second Appellate District addressed for the first time whether restrictions on arbitration agreements contained in the Ralph Act and Bane Act are preempted under the Federal Arbitration Act (“FAA”).
California Proposes New Regulations on Parent Leave and Criminal History Inquiries
California’s Fair Employment and Housing Council (“FEHC”) has proposed new regulations (revised regulations, really) addressing the state’s new ban-the-box and parental leave laws. The regulations are not yet final or in effect, but are being considered by the FEHC and likely will be adopted, potentially with some modifications based on input from public comments and public hearings in the near future, with the first hearing scheduled for April 4, 2018.
California Transportation Industry Waives Goodbye to Enforcement of Federal Arbitration Act Provisions in Employment Contracts
In a loss for the California transportation industry, the Court of Appeal for California’s Fourth Judicial District recently found in Muro v. Cornerstone Staffing Solutions, Inc., that the Federal Arbitration Act (“FAA”) is unenforceable in employment contracts regarding employees who are engaged in transporting goods in interstate or foreign commerce, regardless of whether the employer itself is in the transportation industry.
A Primer on Substituting Paid Leave for Unpaid Disability Leave Under Federal and California Law
Among the many questions California employers face when navigating the ins and outs of various disability leave laws is under what circumstances an employee may choose or be required to utilize paid time off for an otherwise unpaid leave of absence. When dealing with these issues, it is important to consider some nuanced differences between various federal and California state laws. The following are some guidelines for employers to keep in mind:
California Employers Should Reevaluate Their Criminal Background Check Policies Before July 1, 2017
The Department of Fair Employment and Housing (“DFEH”) finalized new regulations limiting the ability of employers to consider criminal history when making employment decisions.
The Latest on Arbitration Agreements
The validity of mandatory arbitration agreements continues to be a major focus of litigation and legislation. As employers know, the U.S. Supreme Court currently is reviewing the issue of whether class action waivers violate the NLRA in the consolidated matters Morris v. Ernst & Young, Lewis v. Epic Systems, and Murphy v. NLRB. Briefing is underway in those matters and oral argument is expected this fall.