California Employers: Remember Voting Time Obligations and Poster

I'm a bit late with this reminder:  At least 10 days before the November 4 election, employers in California must post this notice. Employers also must give employees up to two hours off to vote if they are unable to vote outside of work hours.  Here is information from the California Secretary of State about the law.

NLRB Doubles Down: Again Holds Waivers of Class Actions in Arbitration Agreements Illegal

It's election time. So here's a short political rant:  The National Labor Relations Board is one of the administrative agencies that prove the cliche: elections have consequences.  (The President nominates the Board's members, each of whom is confirmed by the Senate to a five-year term.)  The President packed the Board with "recess appointments" after the Senate would not confirm his nominees. The Supreme Court voided those recess appointments. And then the Senate confirmed a slate of 5 nominees in a political compromise over filibusters and such.  Because advice and consent on the merits. End rant.

Whether you agree or disagree with the administration's politics, it's no secret that the NLRB has set about expanding the reach of the National Labor Relations Act, into non-union settings (like social media policies; handbook policies against insubordination, disloyalty, etc.; confidentiality agreements; and more).  It is not an exaggeration to say that non-union employers face more scrutiny by the National Labor Relations Board than they ever have in the past.

The Board also has weighed in on private agreements to arbitrate. The Board made news a couple of years ago when it held that an employer's requiring employees to waive the right to pursue class relief in mandatory arbitration agreements violated the National Labor Relations Act.  That was the "DR Horton" decision here.  The essence of DR Horton is that class action waivers violate the National Labor Relations Act by requiring employees to give up the right to act in a group (class) concerning wages, hours, or other terms and conditions of employment.

But the Fifth Circuit Court of Appeals refused to enforce DR Horton, meaning it could not be enforced against DR Horton in court, or against other employers as precedent.  Other courts also declined to follow DR Horton in part because it has nothing to do with the National Labor Relations Act, and in part because the U.S. Supreme Court has found class waivers to be fine under the Federal Arbitration Act.  Even the California courts of appeal have refused to hold class waivers unenforceable under DR Horton.

So, given that courts, which interpret the law that Congress enacts, universally rejected DR Horton, the NLRB's decision is probably relegated to the dust-bin of blips in the employment law radar, never to be heard from again, right?

Political rant redux: Nah, this is the 2014 National Labor Relations Board. They are not constrained by silly federal and state judges and stuff!  Ok, I'm done.

The Board's new decision, Murphy Oil (opinion here) gives new life to DR Horton.  Based primarily on encouraging law review articles written by law school professors, 3 of 5 members decided to re-affirm DR Horton and declare once again that class action waivers in arbitration agreements violate the NLRA, and will maintain this position until the U.S. Supreme Court says otherwise.  Given it will take the federal courts and Supreme Court a few years to take up the issue, this will be the Board's position for a while.

So, in this new case,  Sheila Hobson worked for a Murphy Oil facility and signed an arbitration agreement containing this language:

INDIVIDUAL AND COMPANY UNDERSTAND THAT, ABSENT THIS AGREEMENT, THEY WOULD HAVE THE RIGHT TO SUE EACH OTHER IN COURT, TO INITIATE OR BE A PARTY TO A GROUP OR CLASS ACTION CLAIM, AND THE RIGHT TO A JURY TRIAL, BUT, BY EXECUTING THIS AGREEMENT, BOTH PARTIES GIVE UP THOSE RIGHTS AND AGREE TO HAVE ALL EMPLOYMENT DISPUTES BETWEEN THEM RESOLVED BY MANDATORY,
FINAL AND BINDING ARBITRATION. ANY EMPLOYMENT RELATIONSHIP BETWEEN INDIVIDUAL AND COMPANY IS TERMINABLE AT-WILL, AND NO OTHER INFERENCE IS TO BE DRAWN FROM THIS AGREEMENT.

Hobson later sued Murphy under the Fair Labor Standards Act, asserting a collective action along with three other employees.  The federal district court ordered Hobson to individual arbitration.   But Hobson filed a complaint (charge) with the NLRB and the NLRB's General Counsel charged Murphy with an unfair labor practice (forcing Hobson to give up the right to collectively pursue her wage claims).

The NLRB decided 3-2 that Murphy violated the NLRA, that DR Horton was correctly decided and valid, that the circuit courts that rejected it were wrong, and that the 2 dissenting Board members were also wrong.

What is the upshot?

1. Class action waivers in arbitration agreements remain enforceable in court.

2. Employers maintaining class arbitration waivers may expect unfair labor practice charges before the NLRB, including non-union employers.

3.  NLRB orders are not enforceable by themselves, in that the NLRB has to go to a federal court of appeals to obtain a judgment. So, unless a circuit court of appeals enforces the Board's order, the legal effect of an unfair labor practice finding is limited to whatever sanctions the Administration can levy on employers who are federal contractors found to violate the NLRA, and to whatever retribution the NLRB may bring against the employer for refusing to comply with its unenforceable order.

4. If a circuit court does choose to enforce the order, it could create a circuit split, providing some incentive for the U.S. Supreme Court to take up the case.

Be careful out there.

Governor Brown Signs End of Session Employment Laws Part II

Here are some of the other employment laws that Governor Jerry Brown has signed, which will result in new obligations and liabilities in 2015.  

AB 1897 (text is here)  This new law states that employers that use temp agencies ("labor contractors") are liable for the unpaid wages and liability for failure of the contractor to secure workers' compensation insurance.  There are exceptions for certain types of labor.  Additionally, this law applies only to employers of > 25 workers, who hire more than 5 temps from agencies at a time.  So, for example, if your company hires a vendor to work in your manufacturing plant during a busy season. Then the vendor doesn't pay the employees.  You, the employer, will be liable for those payments on the same basis as the vendor.  Neat, right?  Also, employers and vendors cannot contract away this liability in the service agreement.

AB 1660. (text is here).  The California legislature is not done passing employment laws that make it illegal to take action against those applicants / employees who cannot lawfully be employed.  See, if you intentionally employ people who are unauthorized to work, it can be a federal crime. If you don't employ them, you can get sued for violating California law.  Another reason it's fun to be a California employer, eh gang?

The most recent law is AB 1660. This one addresses California's new driver's license that is specially created for "persons of undocumentation," or whatever the term is now.  If you see such a driver's license, do not take negative action against an employee for having one.  That's because:

It is a violation of the California Fair Employment and Housing Act (Part 2.8 . . . for an employer or other covered person or entity, pursuant to Section 12940 of the Government Code and subdivision (v) of Section 12926 of the Government Code, to discriminate against a person because the person holds or presents a driver’s license issued pursuant to this section, or for an employer or other covered entity to require a
person to present a driver’s license, unless possessing a driver’s license is required by law or is required by the employer and the employer’s requirement is otherwise permitted by law. Nothing in this section shall be construed to limit or expand an employer’s authority to require a person to possess a driver’s license.

So, first, it's "national origin" discrimination to take action against someone who has one of these special driver's licenses. Therefore, if an employee can present sufficient documentation to satisfy the I-9 requirements, it's probably a FEHA violation to deny employment based on the fact that the employee cannot establish the bona fides needed for a "regular" driver's license.

Second, it's illegal to ask to see a driver's license, unless the employer requires the employee to have one.  So:  It's probably best not to inspect an employee's driver's license for driving authorization until after the employee is hired.

The law also provides that driver's license information is confidential.  That means it should not be copied and routinely given out. The law does not designate personnel files as confidential, but they are treated as such to protect employees' privacy. So, there's an argument that third party subpoenas for personnel records should not mandate automatic disclosure of driver's licenses unless there is a sufficiently important reason.

That all said, this law recognizes that the employer has the right to obtain proper authorization for an employee to work, including proper documentation to support an I-9 Form.  The law also says it's not a violation to enforce the IRCA by refusing to hire someone who cannot pass the I-9 Form requirements.  So, there's that.

California Governor Brown Signing More New Employment Laws at End of 2014 Session (Part I)

The 2014 legislative session is over.  But employers will be remembering this one for a long time.  California Governor Jerry Brown signed a host of new laws at the end of the session.  Many deal with narrow-cast and public sector-related funding issues, which I won't cover here.  (You're welcome).

But there are several highlights among the new bills that merit your attention.  Thanks as always to Phyllis Cheng, on behalf of the California Bar's Labor and Employment Law section, for compiling the information and sending it out.

AB 1723 expands the Labor Commissioner's power to issue citations for under payment of wages to include waiting time penalties (not a new penalty, but a different method of enforcement).

AB 2617 appears to prohibit pre-dispute releases between employers and independent contractors that include waivers of claims under the "Ralph" and Bane Civil Rights Acts.  These are civil rights laws prohibiting hate crimes and violence based on protected criteria.  This law does not appear to apply to employees, but it's unclear because it's written so poorly.  But it only applies to provisions included in a contract for goods and services, and only prohibits waivers when "entering" into the contract (such as an independent contractor agreement (or offer letter if it applies to employees).  This law will take effect because the Governor also signed AB 2634.

AB 26 and AB 2272 expand prevailing wage law.  Prevailing wage is an inflated minimum wage rate that must be paid to "public works" contracts.  These laws expand what are "public works" and what is included in the term "construction" among other things. If you have state contracts, please review these with your lawyers.

Did the California Legislature Kill Arbitration?

Could be.  Certainly, arbitration services should be concerned that their services may not command the interest they once did.

Governor Brown just signed AB 802. This law applies to new arbitrations administered after 1/1/2015.

I'm going to call this law the "Slow Death to Arbitration Act."  Catchy? The plaintiff trial lawyers legislators who came up with this one are evil geniuses. If your company conducts arbitration, you are going to want to read this one.

One of the benefits of arbitration is that it's private. Not anymore. The major arbitration services, such as JAMS, AAA, etc. must publish at least quarterly a report and post it on its website.  The information will list the good and the bad, will give anyone who looks a free directory of plaintiff attorneys who have sued your companies, and more.  How about the number of mediations you've been involved in?

I'm highlighting in bold what employers should be most concerned about.

(1) Whether arbitration was demanded pursuant to a pre-dispute arbitration clause and, if so, whether the pre-dispute arbitration clause designated the administering private arbitration company.

(2) The name of the nonconsumer party, if the non consumer party is a corporation or other business entity, and whether the nonconsumer party was the initiating party or the responding party,

if known.

(3) The nature of the dispute involved as one of the following: goods; credit; other banking or finance; insurance; health care; construction; real estate; telecommunications, including software and Internet usage; debt collection; personal injury; employment; or other. If the dispute involved employment, the amount of the employee’s annual wage divided into the following ranges: less than one hundred thousand dollars ($100,000), one hundred thousand dollars ($100,000) to two hundred fifty thousand dollars ($250,000), inclusive, and over two hundred fifty thousand dollars ($250,000). If the employee chooses not to provide wage information, it may be noted.

(4) Whether the consumer or nonconsumer party was the prevailing party. As used in this section, “prevailing party” includes the party with a net monetary recovery or an award of injunctive relief.

(5) The total number of occasions, if any, the non consumer party has previously been a party in an arbitration administered by the private arbitration company.

(6) The total number of occasions, if any, the non consumer party has previously been a party in a mediation administered by the private arbitration company.

(7) Whether the consumer party was represented by an attorney and, if so, the name of the attorney and the full name of the law firm that employs the attorney, if any.

(8) The date the private arbitration company received the demand for arbitration, the date the arbitrator was appointed, and the date of disposition by the arbitrator or private arbitration company.

(9) The type of disposition of the dispute, if known, identified as one of the following: withdrawal, abandonment, settlement, award after hearing, award without hearing, default, or dismissal without hearing. If a case was administered in a hearing, indicate whether the hearing was conducted in person, by telephone or video conference, or by documents only.

(10) The amount of the claim, whether equitable relief was requested or awarded, the amount of any monetary award, the amount of any attorney’s fees awarded, and any other relief granted, if any.

(11) The name of the arbitrator, his or her total fee for the case, the percentage of the arbitrator’s fee allocated to each party, whether a waiver of any fees was granted, and, if so, the amount of the waiver.

So, now, the enforceability of an arbitration agreement will be one issue. Whether you want the results of all your arbitrations posted online, with all the above information included, is something else.  Employers will have to consider whether to use private arbitration services, and whether this information revealed to the public makes arbitration an attractive alternative.

Good luck in 2015.