As promised, a longer article on California's New EEO Policy Requirement

I posted a couple of weeks ago (here) about the California Fair Employment and Housing Commissions new EEO regulations (here), which include specific requirements for anti-discrimination and harassment policies.  I promised to post our longer article for you.  Here it is. 

Of course, drafting a new policy is one thing, but putting in place the mechanisms for conducting investigations, having effective complaint procedures, etc. are something else.  Please work with your HR consultants, employment counsel, PEOs, etc. to get these requirements in place before too long.  The new regulations go into effect on April 1, 2016.

The legislature, agencies and courts are keeping us all busy.  I know it's a challenge for me to stay current.  It's probably tough for you too. My blog posts are less frequent than I would like as of late. But our Firm publishes a bi-weekly article on a current employment law issue, which you can find on our website or subscribe to via our *free* newsletter (Just sayin').

Supreme Court's Non-Decision Today in Friedrichs

The U.S. Supreme Court issued a one line, "per curiam" order, in which it noted a 4-4 deadlock in Friedrichs v. California Teachers Association.  You'll see a bunch of news about this, some of which will be...wrong.  So I thought I would explain what actually happened.

The issues before the court primarily focused on whether the Court should overrule a prior decision, Abood v. Detroit Bd. of Education, 431 U.S. 209 (1977).  The Court in Abood held that public sector employees may be required to pay certain fees to unions under the First Amendment, provided that the unions account for how much of the fees are used for bargaining and how much are used for extraneous activity, such as political lobbying.  Those employees who wish to "opt out" of the union's political activities are given the opportunity to pay a lower, "agency" fee, allegedly representing only the bargaining costs.  

In later cases, the Court has chipped away at Abood's First Amendment reasoning. So, the Court was considering whether to overrule Abood, and hold that government employees should not be required to join unions because compelled unionization, compelled financing of unions, etc. violate their right to freedom of association under the First Amendment.  Or the Court could have decided something else.  

We're not going to find out.  The lower courts (including the Ninth Circuit in a summary decision) followed Abood as they must.  This case came before the Court in January for argument. Then Justice Scalia passed away, leaving 8 justices to render a decision.  The Court often decides cases with 8 justices, such as when one justice is recused for conflicts of interest, or when one justice has retired and is being replaced. 

Here, though, the Court deadlocked 4-4.  When that happens, everything simply returns to the status quo as if no case had ever been accepted for review. Therefore, there is no new decision today.  No "victory" for unions or anyone else. And no "loss" for anyone either.   

One can argue that Justice Scalia would have voted to overrule Abood, but one cannot say what the vote would have been if he had been alive, or what the opinions would have said.  So, all the prognostications and news headlines on this issue frankly are silly.  The only thing that is certain is that Abood remains good law and so all remains as it was. 

Also, contrary to what I read this morning, the Senate's failure to confirm Judge Garland had no impact on the decision in this case.  He was just nominated a few days ago. So his confirmation would have had to have happened instantly and THEN, the Court would have had to agree to rehear this matter.  So, no.

Have a nice day.

Greg

California Supreme Court Upholds Arbitration Agreement Against Unconscionability Claim

Baltazar v. Forever 21, Inc. is one of the older employment cases on the California Supreme Court's docket. It has now been put to rest. And the employer came out the winner via a unanimous Court.  Justice Kruger wrote the opinion.

This is another arbitration case, focusing on whether an employer's agreement to arbitrate was "unconscionable" because it included certain provisions.  First, the Court does a nice job of summarizing its recent arbitration cases so that practitioners can one-stop shop  for case law. Thank you Supreme Court. 

When evaluating arbitration agreements, the courts look for procedural and substantive unconscionability. The more procedural unconsionability they find, the less substantive unconscionability they need to discern.  And vice versa.  They call this the "sliding scale."

Procedural Unconscionability

So, the first piece of business the Court addressed is the issue of "procedural unconscionability." That is, whether the arbitration agreement was "take it or leave it" and whether it was obtained via trick or surprise.

Now, as a practical matter, nearly every employment arbitration agreement has some degree of "procedural" unconscionability, because they are almost always "take it or leave it," or "contracts of adhesion."  And here's where the court explained that it will not count an "adhesion" contract as a significant amount of procedural unconscionability unless there is something more - evidence that the employer hid the agreement, or lied to the employee.   

In this case, Baltazar knew about the agreement And she even tried to refuse to sign it.  The employer told her if she did not sign, she would have no job.  The agreement was presented to her in a straight-forward way. Therefore, the court said it was a plain-old adhesion contract. 

The Court also addressed the argument that the employer did not attache the AAA rules to the arbitration contract as evidence of procedural unconscionability. The Court said that there was nothing Baltazar pointed to in the rules that affected her rights. Therefore, there was nothing in the rules that created more procedural unconscionability because they were not given to her.  

Substantive Unconscionability

The Court then turned to Baltazar's substantive unconscionability arguments.  Her first argument was that the arbitration agreement stated that either party could seek injunctive relief in accordance with the California Civil Procedure Code's section 1281.8.   Yes, she argued that the agreement was illegal because it included a statute's provision within it.   Bad argument?  Not when you consider that a previous court of appeal (Trivedi v. Curexo Technology Corp. (2010) 189 Cal.App.4th 387) had held just that.  The court in Trivedi held that a provision that simply stated that either party could seek injunctive relief was unconscionable because employers were more likely to use it.   Goodbye Trivedi.  The Supreme Court disapproved it.  It was on the books for 6 years too long.  

Baltazar also argued that the list of covered claims in the arbitration agreement was unconscionable because only employee-type claims were specifically mentioned.  Here's what the agreement said, as described by the Court:

The parties “mutually agree” to arbitrate “any claim or action arising out of or in any way related to the hire, employment, remuneration, separation or termination of Employee.” The agreement specifies that the disputes subject to arbitration “include but are not limited to: claims for wages or other compensation due; claims for breach of any employment contract or covenant (express or implied); claims for unlawful discrimination, retaliation or harassment . . . , and Disputes arising out of or relating to the termination of the employment relationship between the parties, whether based on common law or statute, regulation, or ordinance.”

The Court had no trouble finding that this language included all claims whether brought by the employer or employee:

The illustrative list of claims subject to the agreement is just that; the agreement specifically states that such claims “include but are not limited to” the enumerated claims, thus making clear that the list is not intended to be exhaustive. It thus casts no doubt on the comprehensive reach of the arbitration agreement. It is not particularly remarkable that the agreement’s list of examples might highlight certain types of claims that employees often bring, since part of the purpose of the agreement is to put employees such as Baltazar on notice regarding the scope of the agreement, thus eliminating any possible surprise.

Finally, Baltazar tried to argue that the agreement's provision protecting trade secrets and confidential information rendered the agreement unconscionable.  Again, the Court was not having it.

Baltazar argues that the arbitration agreement here is unduly one-sided because it provides that, in the course of arbitration, “all necessary steps will be taken to protect from public disclosure [Forever 21’s] trade secrets and proprietary and confidential information.” Baltazar contends that because the agreement neither defines “all necessary steps” nor specifies what constitutes “proprietary and confidential information,” the agreement unfairly demands that employees take whatever steps the employer deems “necessary” to protect whatever information the employer claims to be “proprietary and confidential.”

Baltazar misreads the confidentiality provision. Nothing in the agreement indicates that an employee must accede to any and all demands Forever 21 might make for the protection of confidential and proprietary information. As defendants explain: “This provision contemplates that if trade secret, confidential and proprietary information need[s] to be introduced into the arbitration that the parties [will] work with the arbitrator to make sure that such information is not disclosed to the public.” The agreement does not restrict the use of such information in the proceeding, nor does it pretermit any determination of whether a particular piece of information is a trade secret or otherwise qualifies as proprietary and confidential. Agreements to protect sensitive information are a regular feature of modern litigation, and they carry with them no inherent unfairness.

To the extent that Baltazar’s complaint is instead that the agreement calls for the protection of an employer’s confidential information without similarly calling for the protection of the confidential information of employees, we disagree with the suggestion that this omission renders the arbitration agreement unduly harsh or one-sided. As we stated in Armendariz, supra, 24 Cal.4th at page 117: “ ‘[A] contract can provide a “margin of safety” that provides the party with superior bargaining strength a type of extra protection for which it has a legitimate commercial need without being unconscionable. [Citation.]’ ” Here, the basis for the extra measure of protection is a legitimate commercial need to protect Forever 21’s “valuable trade secrets and proprietary and confidential information” from public disclosure. Although Baltazar may dislike the wording of the confidentiality provision, she does not dispute that it is based on a legitimate commercial need. Moreover, nothing in the agreement precludes employees from seeking comparable protection for their personal information during arbitration proceedings, as circumstances may warrant.

So, this case is another one that will make it easier to draft arbitration agreements without worrying about excessive false mutuality.   You know what I mean.

This case is Baltazar v. Forever 21, Inc. and the opinion is here. 

California Supreme Court: Plaintiffs Who Settle for Money are "Prevailing Parties" for Costs Purposes

Here's a quick post, mostly for litigators in employment law cases.  But clients should make sure that settlement agreements are drafted correctly when they review them.

The California Supreme Court once again interpreted California's costs statute, Civil Procedure Code section 1032.  The case happens to be an employment law lawsuit, but the facts do not really matter.

Section 1032 awards "costs" of suit, such as deposition transcripts, subpoena fees, filing fees, and the like to the "prevailing party" in litigation.

The "prevailing party" can mean "the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant."

Well, if the case settles before trial and the defendant pays the plaintiff money, does that mean that the plaintiff is prevailing party because the plaintiff is "the party with a net monetary recovery?"  Could be!  

But wait. Isn't defendant also the prevailing party because there's a "dismissal" in favor of defendant?  Probably so!  Can there be two prevailing parties then?   Who gets the costs?  Whatever will happen to us now?  

That's why there's a Supreme Court and here's what the Court said:

When a defendant pays money to a plaintiff in order to settle a case, the plaintiff obtains a net monetary recovery, and a dismissal pursuant to such a settlement is not a dismissal in [the defendant‘s] favor. (§ 1032(a)(4).) As emphasized below, this holding sets forth a default rule; settling parties are free to make their own arrangements regarding costs.

So, that means that when there's a settlement, it's very important for the parties to expressly include in the settlement agreement and/or the request for dismissal "each side will bear his/her/its/their own costs."  Unless the parties address the issue, the "default rule" will apply. The plaintiff can go into court and file for costs, which can mean more money on top of the settlement that the defendant paid

Sometimes legal mumbo-jumbo in settlement agreements matters and this is one of those times.

This case is  DeSaulles v. Community Hospital of the Monterey Peninsula and the opinion is here. 

California Fair Employment and Housing Council Regulations Effective April 1, 2016 Require Employers to Change EEO Policies Now

The California Fair Employment and Housing Council is issuing revised regulations regarding discrimination, harassment and the like under the Fair Employment and Housing Act.  Shaw Valenza will be publishing a more detailed article in the next couple of weeks, which I'll post here.

The full text of the revised regulations, with redline and strikeout to show the changes is here. 

Some of the changes will not affect how employers do business, but will affect liability in litigation if courts adopt the Council's view.  But there are several new provisions that employers will have to deal with by amending policies and procedures.

The most urgent issue for employers to deal with - right now - is the Council's new, specific requirements for anti-harassment, discrimination and retaliation policies:   Employers already have a duty to distribute a DFEH brochure or alternative document that complies with Govt Code section 12950. But now, the Council requires much more. This is from section 11023(b) of the new regulations:

In addition to distributing the Department’s DFEH-185 brochure on sexual harassment, or an alternative writing that complies with Government Code section 12950, an employer shall develop a harassment, discrimination, and retaliation prevention policy that: 

(1) Is in writing; 

(2) Lists all current protected categories covered under the Act; 

(3) Indicates that the law prohibits coworkers and third parties, as well as supervisors and
managers, with whom the employee comes into contact from engaging in conduct prohibited by the Act; 

(4) Creates a complaint process to ensure that complaints receive:

(A) An employer’s designation of confidentiality, to the extent possible;(B) A timely response; (C) Impartial and timely investigations by qualified personnel; (D) Documentation and tracking for reasonable progress; (E) Appropriate options for remedial actions and resolutions; and (F) Timely closures.

(5) Provides a complaint mechanism that does not require an employee to complain directly to his or her immediate supervisor, including, but not limited to, the following:

(A) Direct communication, either orally or in writing, with a designated company representative, such as a human resources manager, EEO officer, or other supervisor; and/or

(B) A complaint hotline; and/or

(C) Access to an ombudsperson; and/or

(D) Identification of the Department and the U.S. Equal Employment Opportunity Commission (EEOC) as additional avenues for employees to lodge complaints.

(6) Instructs supervisors to report any complaints of misconduct to a designated company representative, such as a human resources manager, so the company can try to resolve the claim internally. Employers with 50 or more employees are required to include this as a topic in mandated sexual harassment prevention training, pursuant to section 11024 of these regulations.  

(7) Indicates that when an employer receives allegations of misconduct, it will conduct a fair, timely, and thorough investigation that provides all parties appropriate due process and reaches reasonable conclusions based on the evidence collected.

(8) States that confidentiality will be kept by the employer to the extent possible, but not indicate that the investigation will be completely confidential 

(9) Indicates that if at the end of the investigation misconduct is found, appropriate remedial measures shall be taken. 

(10) Makes clear that employees shall not be exposed to retaliation as a result of lodging a complaint or participating in any workplace investigation.

These are all good ideas for employers to follow. But these now must be included in a written policy disseminated to all employees.  

The new regulations also explain how the policy must be disseminated:

Dissemination of the policy shall include one or more of the following methods:

(1) Printing and providing a copy to all employees with an acknowledgment form for the employee to sign and return;

(2) Sending the policy via e-mail with an acknowledgment return form;

(3) Posting current versions of the policies on a company intranet with a tracking system
ensuring all employees have read and acknowledged receipt of the policies;

 (4) Discussing policies upon hire and/or during a new hire orientation session; and/or (5) Any other way that ensures employees receive and understand the policies.

(d) Any employer whose workforce at any facility or establishment contains 10 percent or more of persons who speak a language other than English as their spoken language shall translate the policy into every language that is spoken by at least 10 percent of the workforce.

So, multi-state employers, no more "or any other characteristic protected by state law" in your policies. Please review EEO policies and revise them ASAP.  

It is also critical to ensure there are systems in place for addressing complaints should they arise that are consistent with the policy - such as translation if needed, dissemination of the policy and record keeping, investigations, complaint procedures, etc.