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New California Law Will Outlaw “No-Rehire” Provisions in Settlement Agreements

By James Kachmar on Posted in Discrimination, Employment Contracts and Agreements, Labor Law, New Legislation and Regulations, Retaliation and Wrongful Termination, Wage & Hour

I have discussed in the past how the use of “no-rehire” provisions in settlement agreements between employers and their former employees were coming under attack in court.  In 2015, the Ninth Circuit in Golden v. California Emergency Physicians Medical Group, held that a “no-rehire” provision in a settlement agreement between the plaintiff doctor and his former employer could be found to violate section 16600 of the Business and Professions Code, which codifies California’s long standing public policy favoring employee mobility.  Section 16600 prohibits, with certain limited exception, any contract or agreement that places a restraint on a person’s trade or profession.

Employers find the use of “no-rehire” provisions useful in settlement agreements as a means of a protecting themselves against “boomerang” lawsuits.  That is, these provisions provide some protection to employers who settle claims with a former employee who claims that he or she was terminated because of discrimination from having to face a subsequent discrimination lawsuit if a former employee submits a new job application and is not hired.

California’s Legislature took up this issue and passed Assembly Bill No. 749, which was signed by Governor Gavin Newsom on October 12, 2019.  AB 749 creates a new statutory provision, section 1002.5 of the California Code of Civil Procedure, which will apply to any settlement agreement entered into on or after January 1, 2020.  This new law prohibits an employer from entering into a settlement agreement with an employee to resolve an employment dispute from inserting a provision “prohibiting, preventing or otherwise restricting a settling party that is an aggrieved person from obtaining future employment with the employer against which the aggrieved person has filed a claim” or any affiliate of that employer.  Any provision that violates this section will be void.

The new law will define “aggrieved person” to mean any person who has filed a claim against the employer either in court, before an administrative agency, in an alternative dispute resolution forum such as arbitration, or through the use of the employer’s internal complaint process.  The law does allow the employer and the settling employee to agree to “end a current employment relationship” as well as allows an employer to use a “no-rehire” provision provided that “the employer has made a good faith determination that the [former employee] engaged in sexual harassment or sexual assault.”  Finally, the new law does nothing to affect an employer’s ability to decline to rehire a person “if there is a legitimate non-discriminatory or non-retaliatory reason for terminating the employment relationship or refusing to rehire the person.”

When this new law goes into effect, employers are encouraged to seek legal advice in resolving any disputes with an employee that may involve the termination of that employee’s employment as well as the handling of future applications for rehire from terminated employees who have entered into settlement agreements after January 1, 2020.  This may include reviewing an employer’s form severance agreement to ensure compliance.  While the new law does not apply by its terms to agreements containing such provisions entered into prior to January 1, 2020, employers must tread carefully.  For further details about AB 749 and its history, please see the article, “New California Law Ban `No-Rehire’ Clauses after Worker Lawsuits,” by Wes Venteicher in The Sacramento Bee.

New Laws that Will Significantly Impact the Litigation of Employment Disputes

By Beth V. West on Posted in Disability Discrimination, Discrimination, Employee Privacy Rights, Employment Contracts and Agreements, Harassment, Labor Law, New Legislation and Regulations, Retaliation and Wrongful Termination, Wage & Hour

The October 13, 2019 deadline for Governor Newsom to take his final actions in the 2019 legislative season has come and gone and as expected, he signed into law a number of employment-related bills. Below is a summary of just a few of those bills that will have a significant impact on employment litigation in California.  To read the full article, please click here.

A.    Assembly Bill 51

AB 51 was introduced by Assemblymember Lorena Gonzales and will severely restrict the use of mandatory arbitration agreements in employment. The Bill adds section 12953 to the California Government Code (“FEHA”) and states that it is an unlawful employment practice for an employer to violate section 432.6 of the California Labor Code.

B.   Senate Bill 707

In Armendariz v. Foundation Health Psychcare Services, Inc. case (2000) 24 Cal. 4th 83, the California Supreme Court concluded, among other things, that “when an employer imposes mandatory arbitration as a condition of employment, the arbitration agreement or arbitration process cannot generally require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court.”  In a number of cases after Armendariz, courts have held that an employer’s failure to pay the arbitration costs [and thus delaying or preventing the arbitration of the dispute] constitutes a material breach of the arbitration agreement.

In line with this case law, SB 707, introduced by Senator Wieckowski, provides that a company’s failure to pay the fees of an arbitration service provider in accordance with its obligations contained within an arbitration agreement or through application of state or federal law or the rules of the arbitration provider hinders the efficient resolution of disputes and contravenes public policy.  According to SB 707, a company’s strategic non-payment of fees and costs severely prejudices the ability of employees [or consumers] to vindicate their rights. This practice is particularly problematic and unfair when the party failing or refusing to pay those fees and costs is the party that imposed the obligation to arbitrate disputes.

Therefore, among other things, SB 707 adds section 1281.97 to the California Code of Civil Procedure and provides that in an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration administrator, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an arbitration proceeding are not paid within 30 days after the due date, the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel arbitration.  As a result, the employee [or consumer] may do either of the following:

  1. Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction; or
  2. Compel arbitration in which the drafting party shall pay reasonable attorney’s fees and costs related to the arbitration.

If the employee withdraws the claim from arbitration and proceeds with an action in a court of appropriate jurisdiction, the statute of limitations with regard to all claims brought or that relate back to any claim brought in arbitration shall be tolled as of the date of the first filing of a claim in any court, arbitration forum, or other dispute resolution forum.  Further, if the employee proceeds with an action in a court, the court shall impose sanctions on the drafting party in accordance with Civil Code section 1281.99, which requires the drafting party to the reasonable expenses, including attorney’s fees and costs, incurred by the employee as a result of the material breach.  The court may also impose additional sanctions against a drafting party including, but not limited to, discovery sanctions and terminating sanctions. Continue Reading

Now Available! Weintraub Tobin’s 2020 Labor and Employment Seminar and Training Schedule

By Ramona Carrillo on Posted in Disability Discrimination, Discrimination, Employee Privacy Rights, Employment Contracts and Agreements, FMLA and Other Leaves of Absence, Harassment, Labor Law, New Legislation and Regulations, Reductions in Force, Retaliation and Wrongful Termination, Trade Secrets and Competition, Wage & Hour
Weintraub Tobin’s 2020 Labor and Employment Seminar and Training schedule is now available.  Click here for a copy of the schedule.
If you have any questions on any of our seminars or would like to inquire on private, custom-tailored training, please contact: 
Ramona Carrillo 
(916) 558-6046.

The California Supreme Court Clarifies Wages are NOT Part of the “Civil Penalty” under Labor Code Section 558 in a PAGA Action

By Beth V. West on Posted in Employment Contracts and Agreements, Labor Law, New Legislation and Regulations, Wage & Hour

On September 12, 2019, the California Supreme Court issued it decision in ZB, N.A., and Zions Bancorporation v. Superior Court [Lawson, real party in interest] (“Lawson”).  In analyzing whether the Plaintiff’s lawsuit could be compelled to binding arbitration under the arbitration agreement she entered into with her employer, the Supreme Court clarified that under Labor Code section 558, employees are not entitled to recover underpaid wages in a Private Attorneys General Act (“PAGA”) claim.

Before the enactment of the PAGA, section 558 gave the Labor Commissioner authority to issue overtime violation citations for a civil penalty as follows:

(1)        For any initial violation, fifty dollars ($50) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.

(2)        For each subsequent violation, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.

(Labor Code §558, italics added.)

The Lawson case concerned a PAGA action seeking civil penalties under Labor Code section 558.  Lawson brought the representative action against her employer, ZB, N.A. — with whom she agreed to arbitrate all employment claims and forego class arbitration — and its parent company, Zions Bancorporation (collectively, “ZB”).  ZB filed a motion compelling that Lawson  individually arbitrate her “unpaid wages” claim under section 558 because it was not a PAGA civil penalty claim.

The trial court generally agreed, bifurcating Lawson’s action and granting ZB’s motion to compel arbitration of the “unpaid wages” issue.  However, it ordered the issue to arbitration “as a representative action” for the unpaid wages of all aggrieved ZB employees.  ZB responded by filing both an appeal and petition for writ of mandate with the Court of Appeal.  After consolidating the two, the appellate court dismissed the appeal, holding that Code of Civil Procedure section 1294 only gave it appellate jurisdiction over an order dismissing, not granting, a motion to compel arbitration.  However, ZB persuaded the Court of Appeal to issue the writ of mandate, but the court did so on a different ground from the one ZB asserted.  The appellate court concluded that Lawson’s request for “unpaid wages” under section 558 in fact could not be arbitrated at all.  Relying on Thurman v. Bayshore Transit Management (Thurman), the Court of Appeal interpreted section 558 to expressly include “underpaid wages” within the scope of its “civil penalty” provision.  In the appellate court’s view, an employee could pursue the entire, indivisible civil penalty through the PAGA action, and that pursuant to Iskanian v. CLS Transportation Los Angeles, LLC, her employer could not compel the PAGA claim to arbitration. Continue Reading

California Employers Have Another Year To Comply With New Mandatory Sexual Harassment Prevention Training Requirements

By Shauna N. Correia on Posted in Harassment, Labor Law, New Legislation and Regulations

Last year, new California legislation effective January 1, 2019 expanded the mandatory sexual harassment prevention training requirements for California employees.  That law required that, by January 1, 2020, employers with 5 or more employees must provide their supervisory employees with two hours of classroom or other effective interactive training and education AND must provide their non-supervisory employees with one hour of classroom or other effective interactive training and education.  This training must be provided within 6 months of hire, within 6 months of assumption of a supervisory role, and every two years going forward.  In addition, even if these employees had already been trained in 2018, the Department of Fair Housing and Employment (DFEH) announced that the new law requires these employees to be retrained during calendar year 2019.

California employers raised concerns about these requirements – and the legislature responded. On August 30, 2019, Governor Gavin Newsom signed emergency legislation (SB 778) which is effective immediately.  SB 778 extends the training deadline for training supervisory and nonsupervisory employees from January 1, 2020, to January 1, 2021.

The bill also specifies that an employee who has received this training and education in 2019 is not required to be retrained again until two years from the date of their last training.

This means that employers who trained their regular* employees in 2018 do not need to provide refresher training again until 2020.  Employers who retrained or trained their regular employees in 2019 do not need to provide refresher training until 2021.

*Note: the emergency legislation does not change the law regarding seasonal and temporary workers. Beginning January 1, 2020, seasonal and temporary employees who are hired to work for less than six months, must be trained within 30 calendar days after their hire date or within 100 hours worked, whichever occurs first.

The Training Division of the Labor & Employment Department offers the training and education required by this law.  Please feel free to contact any member of our Labor and Employment team, or our department assistant, Ramona Carrillo (rcarrillo@weintraub.com) to discuss and schedule a training program that meets the specific needs of your workplace.

 

Ninth Circuit Clarifies the Interactive Process Does Not Apply to Public Accommodations under Title III

By Ramona Carrillo on Posted in Disability Discrimination, Discrimination, Labor Law

By:  Nicholas E. Ma

The United States Court of Appeals for the Ninth Circuit recently confirmed in Tauscher v. Phoenix Board of Realtors, Inc. that while employers must engage in an “interactive process” with disabled employees to explore possible accommodations, there is no interactive process requirement for public accommodations and services.  By the same token, businesses and entities providing public accommodations cannot discharge the duties they owe to disabled patrons because of a failure to engage in the interactive process.

Title III of the ADA provides that no individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.  (42 U.S.C. § 12182(a).)  A public accommodation must furnish “appropriate auxiliary aids and services where necessary to ensure effective communication with individuals with disabilities.”  (28 C.F.R. § 36.303(c)(1).)  While “[a] public accommodation should consult with individuals with disabilities whenever possible to determine what type of auxiliary aid is needed to ensure effective communication,” the regulations make clear that “the ultimate decision as to what measures to take rests with the public accommodation, provided that the method chosen results in effective communication.”  (Id. § 36.303(c)(1)(ii).) Continue Reading

Will Assembly Bill 5 – and the Answer to the Question of … What Test Applies When Classifying Independent Contractors … Make it to the Governor’s Desk this Year?

By Beth V. West on Posted in Employee Privacy Rights, Employment Contracts and Agreements, Labor Law

If you’re like me – and thousands of other attorneys, business owners, and individuals in California – you’ve probably been following the progress of Assembly Bill (“AB”) 5 and holding your breath and wondering with anticipation if Governor Newsom will sign the Bill if it makes it to his desk.  As a reminder, AB 5 is the proposed Bill to codify the decision in Dynamex v. Superior Court so that the very strict “ABC Test” would apply in order to determine the status of a worker as an employee or independent contractor for all provisions of the Labor Code and the Unemployment Insurance Code, except in certain industries and professions. Continue Reading

The Request and Use of Background Checks by California Employers

By Shauna N. Correia on Posted in Employee Privacy Rights, Labor Law

By:  Shauna Correia and Nicholas Ma

Many employers routinely conduct background checks of potential and current employees.  It comes to no surprise that in the current digital age, employers can obtain extensive background information on applicants and employees quicker than ever from third party reporting companies.  However, employers must remain vigilant to avoid receiving information prohibited under federal, state, and local laws, and to follow the proper procedures.

To read the full article, please click here.

Certain Delivery Drivers Are Exempt from the Federal Arbitration Act and May Proceed with Class Actions

By Ryan Abernethy on Posted in Labor Law

 

In this age of expensive class-action litigation, many California companies have found solace in their arbitration agreements. Under certain circumstances, the enforcement of such agreements includes the dismissal of class action claims. This has largely been made possible by the Federal Arbitration Act (FAA) which requires judges to enforce a wide range of written arbitration agreements notwithstanding contrary state law. California courts have a long history of delivering rulings that attempt to narrow the scope and effect of the FAA. As one of the latest examples, the California Court of Appeal for the Fifth District held that truck drivers who complete only intrastate deliveries are exempt from the FAA because their work was part of a “continuous stream of interstate travel.” Continue Reading

AB 51: Another Attempt to Take Down Mandatory Arbitration Agreements in California

By Ramona Carrillo on Posted in Employment Contracts and Agreements, New Legislation and Regulations, Wage & Hour

By:  Kritika Thukral

Background

Mandatory arbitration agreements are a source of contention in employment law. However, since 2000, they are generally permissible in California. In response, the California Legislature has made repeated efforts to ban such agreements over the years. In the past, many such bills have passed both the state assembly and the state senate and have ended up on the Governor’s desk. However, none of the bills have been enacted into law. Nevertheless, Assemblywoman Lorena Gonzalez from San Diego has introduced Assembly Bill 51 (AB 51) in the current legislative session. This bill is nearly identical to the previous vetoed measures to make mandatory arbitration agreements illegal. Continue Reading