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CALIFORNIA EMPLOYMENT
LAW UPDATE


NOVEMBER 2023 CALIFORNIA EMPLOYMENT LAW NOTES

By Tony Oncidi on November 30, 2023 Posted in #MeToo, Age discrimination,
Anti-SLAPP, appeal, appellate court, Arbitration, Arbitration Agreements,
Arbitration provision, Attorney's Fees, base compensation, Breach of Contract,
California Code of Civil Procedure, California Labor & Employment Law,
California Labor Code, claim, Class Action, Class Actions, compensation,
complaint, Coronavirus, Court of Appeal, Court of Appeals, COVID-19, deadline,
Defamation, Discrimination, Diversity and Inclusion, EEOC, employee, Employee
Benefits, employer, employer misconduct, employment, Employment Policies,
Federal Jurisdiction, FEHA, Gender discrimination, Gender Identity, Harassment,
increased compensation, judgment, Labor Code violations, Meal Periods and Rest
Breaks, misconduct, PAGA, Retaliation, serious and willful misconduct, Sexual
Harassment, Sexual orientation discrimination, Trade Secrets, Verdict, Wage and
Hour, Wage Statements, Workers Compensation

We invite you to review our newly-posted November 2023 California Employment Law
Notes, a comprehensive review of the latest and most significant developments in
California employment law. The highlights include:

> Company That Hired Competitor’s Employee Was Not Entitled To Arbitrate Claims



> Disability Discrimination Claim Was Properly Dismissed On Summary Judgment



> Employee’s Attorney’s “Pervasive Incivility” Justified $460,000 Reduction In
> Fees



> Employees Were Properly Awarded $7.2 Million For Employer’s Breach Of Contract



> Lawyer-Investigators Recover Attorneys’ Fees Following Successful Anti-SLAPP
> Motion



> Employer Improperly Delayed Pay To Employees Terminated After Onset Of
> COVID-19



> Employee’s Meal and Rest Break PAGA Claims Survive Summary Judgment



> Once Again, Employer Loses Right To Arbitrate By Failing To Timely Pay
> Arbitration Fees



View here: California_Employment_Law_Notes_November_2023

Tags: 0.4 negative multiplier. lack of civility, accrued vacation time,
accusations, affirm, agreements, allegations, anonymous employee, anti-SLAPP,
appeal, arbitration, arbitration fees, assault, attorney's fees, award, bias,
biased investigation, breach Fair Employment and Housing Act, breach of
contract. trial court, break policies, burden of production, Cal. Code Civ.
Proc. § 1281.4., Cal. Code Civ. Proc. § 1281.98(a)(1), calculation, California
Labor Code, cat's paw theory, certified class, claims, colleagues, Compelled
Arbitration, Compensation, competent proof, Competition, complimentary,
confidential information, Court of Appeal, COVID-19, damages, deadline,
defamation, discharge, discrimination, dismissal, Diversity, EEOC, email,
emails, employer, employment, exception, excludable, federal court, fixed
amount, FLSA, former employer, gender, handbooks, harassment, hotel rooms,
Hyatt, injunction, interactive process, investigation, judgment, jury, Labor
Code violation, laid off, law firm, limitations period, Meal and rest periods,
motion, motion for summary judgment, Ninth CIrcuit, nondiscriminatory, nurse,
PAGA, panel, partner, pay calculation, policies, prejudgment, premiums,
pretextual, probable validity, probable validity standard, profit sharing,
prompt payments, race, readily ascertainable amount, recover attorney's fees,
required breaks, Reversal, sexual harassment, sexual orientation, state court,
statute, statutory grace period, stay of litigation, strike complaint,
subsequent conduct, summary judgment, temporary layoff, tentative ruling,
tenure, termination, trade secrets, trial, trial court, uncivil, understaffing
and workload policies, Uniform Trade Secrets Act, university, vacated order,
violation
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THE CASE FOR A PAGA ADEQUACY REQUIREMENT

By Jonathan Slowik and Ariel Brotman on November 30, 2023 Posted in California
Labor Code, Class Actions, FCA, PAGA, Wage and Hour

In Arias v. Superior Court, 46 Cal. 4th 969 (2009), the California Supreme Court
ruled that Private Attorneys General Act (PAGA) actions need not satisfy class
action requirements, and in the fourteen years since, PAGA plaintiffs have
routinely (and often successfully) resisted attempts to apply class action
principles to PAGA actions.  A recent unpublished California Court of Appeal
decision bucks that trend by lending support for an implied adequacy requirement
for PAGA plaintiffs and counsel.

In Stone v. Kim, 2023 WL 8011417 (Cal. Ct. App. Nov. 20, 2023), the California
Court of Appeal affirmed the dismissal of a PAGA claim brought by a plaintiff
who sought to prosecute the action in pro per.  As the Court explained, a PAGA
plaintiff represents the interests of the state labor enforcement agency, so by
proceeding in pro per, the plaintiff (who was not an attorney) was engaged in
the unauthorized practice of law.  Therefore, the trial court properly sustained
the demurrer.  Id. at *1

The Court could have stopped there.  However, it continued by analogizing PAGA
actions to qui tam actions brought under the False Claims Act (FCA)—a context it
found “instructive.”  Id. at *2.  The Court cited U.S. ex rel. Rockefeller v.
Westinghouse Electric Co., 274 F. Supp. 2d 10, 16 (D.D.C. 2003) for the point
that, “[g]iven the potential” for the plaintiff to bind the government in such
actions, “the government must have adequate representation,” and therefore,
“qualified legal counsel.”  Id.

The court in Rockefeller elaborated by analogizing FCA claims to class actions:
“Like . . . a class member in a class action suit, a lay relator in a FCA action
needs qualified legal counsel to ensure that the real party at interest, the
United States, is adequately represented,” and “[t]he need for adequate legal
representation on behalf of the United States is obviously essential.” 
Rockefeller, 274 F. Supp. 2d at 16.  Stone found this reasoning also “applies to
claims under [PAGA]”—and for good reason.  Stone, 2023 WL 8011417, at *2.  Like
FCA relators, PAGA plaintiffs “represent and can bind the government, which
needs adequate representation.”  Id.

If PAGA implicitly requires that the government be represented by adequate
counsel, it may stand to reason that it must also be represented by an adequate
plaintiff.  Just as the government may be prejudiced by inadequate legal
counsel, it may also be prejudiced if its interests are represented by a
conflicted plaintiff, or a plaintiff who is unaware of or unwilling to undertake
her responsibilities as a party.  Because a PAGA plaintiff acts in a law
enforcement capacity on behalf of the State of California, other criteria—such
as convictions for felonies or crimes of moral turpitude—arguably should also be
disqualifying.  See Cal. Gov. Code § 19572 (setting forth grounds for discipline
of state civil service employees, up to and including termination).

While plaintiffs may object to any attempt to impose class action-type
requirements in PAGA actions, by allowing a plaintiff to represent absent
parties while aggregating together multiple alleged violations, PAGA raises
similar challenges for the court system as class actions do.  At times, these
similar challenges may call for similar solutions, and if the recent oral
argument in Estrada v. Royalty Carpet Mills, Inc. is any indication, courts may
be open to some prudential limits on PAGA actions not expressly spelled out in
the statute’s text.  In this regard, requiring that the State of California be
represented by adequate counsel and an adequate plaintiff could be low-hanging
fruit.

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IS THE CALIFORNIA SUPREME COURT GOING TO THROW EMPLOYERS A BONE ON PAGA?

By Jonathan Slowik, Philippe A. Lebel, Tony Oncidi, Gregory Knopp and Dixie
Morrison on November 8, 2023 Posted in California Supreme Court, PAGA, Wage and
Hour

On November 8, 2023, the California Supreme Court heard oral argument in Estrada
v. Royalty Carpet Mills, Inc., a case that could have profound implications for
the future of Private Attorneys General Act (PAGA) litigation.  The Court
granted review in order to decide whether courts have the power to strike or
limit PAGA claims that would prove to be unmanageable at trial.

A prior case, Wesson v. Staples the Office Superstore, LLC, 68 Cal. App. 5th 746
(2021), held that trial courts have inherent authority to strike or limit PAGA
claims that could not otherwise be made manageable.  Just a few months later,
the Court of Appeal in Estrada disagreed, concluding that while a court could
limit the presentation of evidence to ensure a manageable trial (which could
make it difficult for the plaintiff to prove widespread violations), courts had
no authority to strike or limit PAGA claims before trial.  Estrada v. Royalty
Carpet Mills, Inc., 76 Cal. App. 5th 685 (2022).

When the California Supreme Court granted review in Estrada, court watchers
would be forgiven for assuming that a total victory for the plaintiffs was a
foregone conclusion.  For over a decade, the Supreme Court cases that have
largely defined PAGA jurisprudence—Adolph, Kim, Williams, Iskanian, and
Arias—have almost uniformly been decided in the plaintiffs’ favor.

To be sure, the Court does appear poised to rule that trial courts lack the
authority to strike PAGA claims based on manageability concerns.  Multiple
justices asked questions indicating skepticism about the purported source of
this authority, and they suggested that less drastic measures could protect
defendants’ due process rights and ensure the proper functioning of courts. 
Indeed, defense counsel conceded that striking a claim may be a remedy reserved
for “rare” cases, such as where the plaintiff refuses to engage in the process
of determining a manageable trial plan.

However, several justices seemed to have serious reservations about denying
trial courts the ability to limit PAGA claims to ensure manageability.  As
Justice Groban stated pointedly, “Some of us are concerned” about a situation
where (in his example) multiple Labor Code violations are alleged, hundreds or
thousands of employees are at issue, and different work sites and different
types of employees are at issue (everyone from janitors to accountants). 
Justice Groban asked why, in that case, the court could not say, “We can’t have
the janitors and accountants in one trial.  I’m going to limit it to the
accountants.”

Other justices raised similar concerns.  Even Justice Liu—who authored the
Iskanian and Adolph decisions and has been perhaps the Court’s most vocal critic
of employers’ positions in PAGA cases—seemed to acknowledge that in extreme
cases, courts may need recourse if manageability concerns threaten to overwhelm
the proper functioning of the judiciary.

Estrada may not be the end of the story, because a decision that trial courts
may limit (but not strike) PAGA claims will likely just raise additional
questions to be further hashed out in the lower courts.  One obvious question
that appears outside the scope of review in Estrada is what test trial courts
should apply when determining whether a case requires judicial intervention in
order to be made “manageable.”  Other questions may include when in the
proceedings trial courts may decide a case is unmanageable as pled, and what
demands trial courts should make on PAGA plaintiffs to demonstrate manageability
(such as presenting a written trial plan).

The Court must issue its decision within 90 days (i.e., by February 2024), but
could choose to rule sooner.  Employers will need to keep their fingers crossed
in the meantime, and of course, could still be disappointed.  However,
Wednesday’s argument should provide employers some hope that they have at least
fought plaintiffs to a draw on the manageability issue.

Tags: Due Process, manageability
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TRADE SECRETS CLAIM AGAINST COMPANY NOT SEVERABLE FROM CLAIM AGAINST EMPLOYEE,
APPEALS COURT FINDS

By Gregory Knopp and Dixie Morrison on November 7, 2023 Posted in Arbitration
Agreements, California Code of Civil Procedure, Trade Secrets

A California semiconductor manufacturer cannot pursue in court its claims of
trade secret misappropriation against a rival company while simultaneously
arbitrating the same claims against the allegedly larcenous employee, a state
appeals court recently found.

In Mattson Technology, Inc. v. Applied Materials, Inc., a California Court of
Appeal ruled that the trial court erred by not staying Applied Materials’ trade
secret misappropriation claims against rival Mattson Technology while Applied
pursued in arbitration the linked misappropriation claims against the
ex-employee who allegedly absconded with confidential information to Mattson.

Both Mattson and the ex-employee, who signed an arbitration agreement with
Applied as part of his employment contract with the company, had moved to compel
to arbitration Applied’s claims against them, with differing levels of success.
The trial court granted the ex-employee’s motion but not Mattson’s. The trial
court also denied Mattson’s motion to stay the litigation against it while
Applied’s claims against the ex-employee continued in arbitration.

The appeals court agreed with the trial court’s ruling that Mattson could not
compel Applied’s claims against it to arbitration, as Mattson was not a party to
Applied’s arbitration agreement with the ex-employee. However, the appeals court
found the trial court erred by not staying those claims until the ex-employee’s
arbitration was resolved.

Section 1281.4 of the Code of Civil Procedure requires a court to stay an action
or proceeding where the court “has ordered arbitration of a controversy which is
an issue involved in an action or proceeding” unless the controversy is
“severable.” The appeals court disagreed with the trial court’s determination
that Applied’s claim against Mattson was independent of and therefore
“severable” from Applied’s claim.

We will continue to monitor this case for any updates.

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IN A SURPRISE MOVE, CALIFORNIA ENACTS BOATLOAD OF NEW PRO-EMPLOYER LAWS – NAH,
JUST KIDDING, IT’S GOING TO BE MORE BURDENSOME THAN EVER!

By Tony Oncidi, Jonathan Slowik and Sehreen Ladak on October 20, 2023 Posted in
Arbitration, Arbitration Agreements, Arbitration provision, Attorney's Fees,
Breach of Contract, Cal. Lab. Code § 1102, Cal. Lab. Code § 1102.5(b),
California Labor & Employment Law, California Labor Code, Collective Bargaining,
COVID-19, Employee Discipline, Employment Policies, Equal Pay Act, FAA, FEHA,
Harassment, New and Proposed Laws and Legislation, Non-Competition Covenants,
Paid Sick Leave, Retaliation, Wage and Hour, Whistleblowers

In what has become an annual tradition, California – that fabled workers’
paradise on earth – has enacted a slew of new laws that, come January, may keep
even the most hearty HR professionals up at night.

As we reported earlier this year (here), the California Chamber of Commerce
initially identified 11 “Job Killer Bills” that were introduced early in the
legislative session, but only three of those bills made it into the statute
books.  The other eight either died in committee, were amended to be more
palatable to employers, or were vetoed by the Governor.

So, here is a brief description of the new crop of employment laws that you
should know about before they become effective on January 1, 2024:

Law Summary & Impact on Employers Action

SB 616

Gonzalez,

D-Long Beach

More Paid Sick Leave.  As we reported here, SB 616 increases the amount of paid
sick leave employers are required to provide employees from 3 days (24 hours) to
5 days (40 hours).  Tagged a “Job Killer” bill, it also raises the total amount
of paid sick leave employers must permit employees to accrue and carry over from
one year to the next from 6 days (48 hours) to 10 days (80 hours). SIGNED INTO
LAW

SB 365

Wiener,

D-San Francisco

Another Assault on Arbitration.  As we have reported below, one of the things
the California Legislature loves to hate the most is arbitration.  In a
seemingly clear deviation from existing US Supreme Court precedent and the
Federal Arbitration Act (“FAA”), this “Job Killer” statute amends California
Code of Civil Procedure § 1294 (based upon a statute that has been on the books
since at least 1927) to eliminate the long-standing automatic stay of trial
court proceedings that takes effect while an appeal is pending from the denial
of a motion to compel arbitration.  This means a trial court judge will have the
discretion to order an employer to continue litigating in court (including going
through with a jury trial) even while the employer is challenging on appeal a
denial of its right to arbitrate.  Only time will tell if this new law will be
struck down by a federal court applying the FAA. SIGNED INTO LAW

AB 647

Holden,

D-Pasadena

Right of Recall for Grocery Store/Distribution Center Employees.  Existing law
establishes grocery worker retention provisions that require a buyer of an
existing grocery store to retain employees for a 90-day transition period,
during which an employee may only be discharged for cause and must be considered
for continued employment after the transition period.  The existing definition
of “grocery establishment” means a retail store that is over 15,000 square feet
in size and that sells primarily household foodstuffs for offsite consumption.
Another “Job Killer” bill, this law broadens the statute to include
“distribution centers” owned and operated by a “grocery establishment”
regardless of square footage.

Creating a new private right of action, the new law also grants employees, union
representatives and nonprofit corporations the ability to file an action in
court for violation of an employee’s right under this law.  Potential damages
include civil penalties, liquidated damages, reinstatement, lost wages and
benefits, punitive damages, attorney’s fees and costs.

SIGNED INTO LAW

SB 525

Durazo,

D-Los Angeles

Minimum Wage Increase for Health Care Workers.  The new law provides for a
multi-faceted statewide minimum wage schedule for healthcare workers employed by
certain covered healthcare facilities.  The definition of “covered health
facility” applies to nearly every type of health care facility, except those
owned, controlled, or operated by the California Department of State Hospitals
and certain tribal clinics and outpatient facilities.  SB 525 consists of 5
separate minimum wage schedules for covered health care employees depending on
the nature, size, and structure of the employer’s business.  The law applies to
“covered health care employees,” which includes a broad array of positions, from
patient care roles like nurses and physicians to support positions such as
janitors and clerical workers. It also extends to contracted or subcontracted
employees when the healthcare facility has control over their wages, hours, or
working conditions.  The wage increases go into effect beginning June 1, 2024.
 Because of amendments that allow for phased minimum wage increases based on
hospital size and operations, the Chamber of Commerce withdrew its “Job Killer”
tag.  The framework of this new law is extremely nuanced, and we suggest
reaching out to counsel with questions about its application and interpretation.
SIGNED INTO LAW

SB 723

Durazo,

D-Los Angeles

COVID-19 Right of Recall Extended.  As we reported here in 2021, SB 93 required
certain employers in the hospitality and service industries to rehire employees
laid off due to the COVID-19 pandemic.  SB 723 moves the expiration of this
“right of recall” for hospitality and service industry employees from December
31, 2024 to December 31, 2025 and adds a presumption that separation due to lack
of business, reduction in force, or other economic, non-disciplinary reasons is
due to a reason related to the COVID-19 pandemic.

Initially, the bill presumed all layoffs were due to the pandemic without the
opportunity for employers to submit evidence to the contrary.  The Chamber of
Commerce withdrew its “Job Killer” tag after amendment.  

SIGNED INTO LAW

SB 699

Caballero,

D-Merced

 

Prohibition Against Non-Compete Agreements.  This bill establishes that any
contract that is void under California’s non-compete prohibition is
unenforceable regardless of when and where the contract was signed.  It also
prohibits an employer from attempting to enforce a contract that is void,
regardless of whether the contract was signed and the employment was maintained
outside of California.  Thus, SB 699 invalidates non-competes that were signed
by employees working in states that allow such agreements, where the employee
thereafter moves to California to take a job in California.  An employer that
enters into or seeks to enforce an unlawful noncompete will be considered to
have committed a civil violation.  Further, employees may sue for violations of
this new law and seek recovery of damages, injunctive relief, and attorneys’
fees. SIGNED INTO LAW

AB 1076

Bauer-Kahan,

D-Orinda

Codification of Non-Compete Ban.  This bill codifies the holding in Edwards v.
Arthur Andersen LLP, 44 Cal. 4th 937 (2008), which states that any non-compete,
no matter now narrowly tailored is void. It also clarifies that California’s
invalidation of noncompete agreements is not limited to contracts in which the
person being restrained from engaging in a lawful profession, trade, or business
is a party to the contract.  Additionally, AB 1076 creates a new notice
requirement by which employers must notify current and former employees in
writing by February 14, 2024 of any earlier-signed noncompete clause or
agreements that are void. SIGNED INTO LAW

SB 848

Rubio,

D-Baldwin Park

 

Leave for Reproductive Loss.  This bill allows for unpaid leaves of absence for
reproductive-related losses, such as a failed adoption or surrogacy,
miscarriage, stillbirth, or unsuccessful assisted reproduction.  The leave must
be taken within 3 months of the event. If an employee experiences more than one
reproductive loss event in a 12-month period, the employer is not obligated to
grant more than 20 days of leave. Unless existing company policy provides for
paid leave, the leave entitlement is unpaid, but employees may still use other
leave balances, including accrued available sick leave. SIGNED INTO LAW

SB 700

Bradford,

D-Los Angeles

 

Expansion of Marijuana-Use Protections.  This bill expands AB 2188, which passed
last year (and which we discussed here).  With some exceptions, AB 2188
prohibits discrimination in hiring, terminating, or any other term of employment
on the basis of: (1) a person’s use of cannabis off the job and away from the
workplace; and (2) an employer-required drug screening test that has found the
person to have non-psychoactive cannabis metabolites in their hair, blood,
urine, or other bodily fluids. SB 700 also makes it unlawful to discriminate
against a job applicant based on information regarding prior use of cannabis
that is learned from a criminal history report.  Like SB 700, AB 2188 goes into
effect on January 1, 2024. SIGNED INTO LAW

SB 497

Smallwood-Cuevas,

D-Los Angeles

 

Retaliation Rebuttable Presumption.  SB 497 creates a rebuttable presumption of
retaliation under Labor Code sections 98.6 and 1197.5 if an employer engages in
any adverse action within 90 days of an employee’s protected activity (e.g.,
making complaints or claims related to rights under the jurisdiction of the
Labor Commissioner, making complaints about unpaid wages, or making complaints
about equal pay violations).  This presumption makes it easier for employees to
establish a prima facie case and significantly more difficult for employers to
obtain dismissal of such retaliation claims at the summary judgment stage.

The bill also increases the civil penalty imposed on an employer under section
1102.5 from $10,000 generally to $10,000 per employee per violation.

SIGNED INTO LAW

 

The “Job Killer Bills” that did not make the cut this year are listed here:

Bill Summary & Impact on Employers Action

SB 799

Portantino,

D-Burbank

No Unemployment for Striking Employees.  SB 799 would have allowed striking
workers to obtain unemployment benefits when they choose to strike.  Because
employers pay the UI fund, had it become law, SB 799 would have forced employers
to effectively subsidize striking employees at unrelated businesses, increased
taxes on employers, and put the state into further debt.

VETOED

 

AB 524

Wicks,

D-Oakland

No Protected Status for “Family Caregiver”.  In a second loss in as many years
for Assemblymember Wicks, Governor Newsom vetoed this bill to expand
California’s Fair Employment and Housing Act (“FEHA”) to include “family
caregiver status” as a protected characteristic (along with race, religion,
color, national origin, disability, sexual orientation, etc.). In a refreshingly
out-of-character veto message found here, the Governor admitted the ambiguity of
the bill would make it “difficult to implement and lead to costly litigation for
employers in California.”  Assemblymember Wicks proposed a similar bill last
year, which sought to add “familial responsibilities” as a protected category
under FEHA but did it not advance beyond the Assembly. VETOED

SB 627

Smallwood-Cuevas,

D-Lake Elsinore

Chain Employers Free from Chains of Employee Transfer Rights. If signed into
law, SB 627 would have required chain business employers sharing a brand and
parent company that have 100+ locations nationwide to (1) provide 60 days’
notice before closing any location of the chain business; and (2) provide
employees of the closing location who have worked for the chain for at least six
months the opportunity to remain employed and transfer to another chain business
location within 25 miles of the closing location as positions become available.
 Governor Newsom recognized the arbitrary and ambiguous nature of the law and
significant burden on employers in his veto message. VETOED

SB 399

Wahab,

D-Hayward

Employer Speech.  SB 399 would have prevented employers from requiring employees
to attend meetings in which the employer could share its opinions on religious
or political matters, including unionization.  It also would have provided a
private right of action for employees who believed they suffered discrimination,
retaliation, or other adverse employment action from their refusal to attend an
employer-sponsored meeting. FAILED IN COMMITEE

AB 1156

Bonta,

D-Oakland

No Presumption Of Illness or Injury for Hospital Employees Seeking Workers’
Compensation Benefits.  This bill would have added new provisions to the Labor
Code creating a rebuttable presumption that certain illnesses and injuries
suffered by hospital employees who provide direct-patient care were incurred in
the course of their employment, for the purpose of claiming workers’
compensation benefits.  The bill would have significantly increased costs for
public and private hospitals and been a further drain on the workers’
compensation system.  Like the identical bill (SB 213) proposed last year, this
bill died in committee. FAILED IN COMMITEE

SB 809

Smallwood-Cuveas,

D-Lake Elsinore

Blanket Prohibition on Consideration of Conviction History in Employment.  This
bill would have prohibited nearly every employer from considering the criminal
conviction history of an applicant or existing employee in employment decisions,
regardless of how the information was obtained, and would have imposed
cumbersome processes on employers blocking them from refusing to hire
individuals with certain convictions.  Employers also would have been prohibited
from asking employment applicants to share with an employer their personal
social media accounts. FAILED IN COMMITTEE

 

So, there they are!  Another year, another avalanche of shiny new employment
laws on the statute books of the Golden State.  And although some of this year’s
“Job Killers” didn’t cross the finish line, we’re sure they still remain a glint
in some lawmaker’s eye, because there’s always next year!  We will continue to
monitor the application and enforcement of these new laws and provide relevant
updates as needed.

 

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JUST IN TIME FOR FLU SEASON, CALIFORNIA EXPANDS SICK LEAVE REQUIREMENTS

By Philippe A. Lebel and Morgan Peterson on September 25, 2023 Posted in
Employee Benefits, New and Proposed Laws and Legislation, Paid Sick Leave

Last week, the California Legislature passed Senate Bill 616 (“SB 616”), an
amendment to California’s statewide paid sick leave law that significantly
increases the amount of leave that employers need to provide and permit
employees to carry over from year-to-year.  The bill was sent to Governor Newsom
on Wednesday, and he is expected to sign it into law.

Many employers in California’s major population centers already provide well in
excess of the three days required under current state law.  Santa Monica and
several cities in the San Francisco Bay Area already mandate that employers
provide up to 72 hours of paid sick leave, and California’s most populous
city—Los Angeles—requires up to 48 hours per year.  However, for employers with
workers outside these areas, SB 616 will significantly expand their sick leave
obligations.

SB 616 increases the minimum amount of sick leave time eligible employees must
accrue each year from 24 hours (three days) to 40 hours (five days).  The bill
preserves the existing accrual rate—i.e., one hour accrued for every 30 hours
worked—but employers may use a different accrual method as long as eligible
employees accrue: (a) no less than 24 hours (or three days) of paid sick leave
by the end of their 120th day of employment; and (b) no less than 40 hours (or
five days) of paid sick leave by the end of their 200th day of employment.

While the current law permits employers to cap annual sick leave usage to 24
hours or three days per year, SB 616 expands the permissible annual usage cap to
40 hours or five days.  SB 616 also raises the total amount of paid sick leave
that employers must allow employees to accrue over time and carry over from one
year to the next from 48 hours (or six days) to 80 hours (or 10 days).

Employers who prefer to use an up-front sick leave allocation—a popular method
due to its relative administrative ease—will now need to deposit 40 hours (or
five days) of sick leave in employees’ leave banks each year.

Although SB 616 continues to include an exception for employers covered by a
valid collective bargaining agreement (“CBA”) that provides for paid sick leave,
subject to certain conditions, it requires that such employees be permitted to
use sick leave for the same reasons as employees who are not subject to a CBA.

Given that the Governor is expected to sign SB 616 into law, California
employers should plan to review their sick leave policies and practices before
the end of the year.

Tags: legislation, new California law, paid sick leave
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SEPTEMBER 2023 CALIFORNIA EMPLOYMENT LAW NOTES

By Tony Oncidi on September 19, 2023 Posted in appellate court, base
compensation, California Department of Corrections and Rehabilitation,
California Labor and Workforce Development Agency, Court of Appeals, Employment
Law Notes, Labor Code Section 4553, Liability for Employee’s Actions Outside the
Workplace, Off-the-clock Issues, permanent disability, Reasonable Accomodation,
reconsideration

WE INVITE YOU TO REVIEW OUR NEWLY-POSTED SEPTEMBER 2023 CALIFORNIA EMPLOYMENT
LAW NOTES, A COMPREHENSIVE REVIEW OF THE LATEST AND MOST SIGNIFICANT
DEVELOPMENTS IN CALIFORNIA EMPLOYMENT LAW. THE HIGHLIGHTS INCLUDE:

 * EMPLOYERS OWE NO DUTY OF CARE TO PREVENT THE SPREAD OF COVID TO EMPLOYEES’
   HOUSEHOLD MEMBERS

 * SCHOOL DISTRICT EMPLOYER DID NOT VIOLATE THE LAW BY REQUIRING COVID
   VACCINATION/WEEKLY TESTING

 * EMPLOYER MUST PROVE “SUBSTANTIAL INCREASED COSTS” WOULD RESULT FROM RELIGIOUS
   ACCOMMODATION

 * FIRE CHIEF WAS TERMINATED FOR MISCONDUCT NOT BECAUSE OF HIS RELIGION

 * COURT AFFIRMS $7.1 MILLION WHISTLEBLOWER VERDICT

 * BUSINESS ENTITY AGENTS OF EMPLOYER SHARE POTENTIAL FEHA LIABILITY

 * ARBITRATOR CORRECTLY ENFORCED RELEASE AGREEMENT EXECUTED BY EMPLOYEE

 * PAGA PLAINTIFFS MAY MAINTAIN REPRESENTATIVE CLAIMS IN COURT AFTER INDIVIDUAL
   CLAIMS ARE COMPELLED TO ARBITRATION

 * COVID-19 EMERGENCY ORDER EXTENDING STATUTE OF LIMITATIONS FOR CIVIL CASES
   UPHELD

 * NON-PARTY PLAINTIFFS WITH OVERLAPPING PAGA CLAIMS MAY BE ABLE TO “PERMISSIBLY
   INTERVENE” IN RELATED ACTIONS

 * DISABILITY LEAVE IS NOT “COMPENSATION” UNDER CALIFORNIA WORKERS’ COMPENSATION
   LAW

 * NURSE MAY PROCEED WITH CLASS CERTIFICATION ON WAGE STATEMENT CLAIM

 * PRINCIPAL OF FORMER EMPLOYER LIABLE BASED ON ALTER EGO THEORY

View PDF

Tags: ability to work, accrued, affirmed dismissal, age discrimination, alleged
discrimination, alter ego, Amazon, amended complaint, appeal, appelate court,
appellate court, arbitration, arbitration prevention, arbitration provision,
arbitrator, assets, authority, award, bad faith, base compensation, binding
arbitration, business, Cal Civil Code Section 1668, Cal Civil Code Section
56.20(b), Cal Labor Code Section 1102.5, Cal Labor Code Section 1102.6, Cal
Labor Code Section 232.5, California Code of Civil Procedure, California Code of
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medical screenings, menstrual periods, mental illness, misclassification,
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plaintiffs, permanent disability, personal interest, petition to vacate,
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private consultant, progressive discipline, proof of vaccination, proposed
complaint, prospective employers, public policy, public services, punitive
damages, putative class action, reaffirmation, reasonable accommodation,
reconsideration, records of assets, refusal to comply, release, release
agreement, release of claims, release of medical records, releases of liability,
relevant records, religion, religious accommodation, religious event, remote
work, reprehensible conduct, representative claims, res judicata, resignation,
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and willful misconduct, settlement, settlement agreement, settlement
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Health Officer, state whistleblower statutes, Statute of Limitations, stay, stay
of proceedings, stipulation, stray remarks, summary judgment, technology,
technology services agreement, temporary disability, termination, termination
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off, Title VII, tolling, tort, tort duty, transfer of company, trial, trial
court, Uber, undue hardship, unpaid wages, unsafe working conditions, unwieldy,
USHW, USPS, vacating opinion, vaccination status, verbal abuse, violation of
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work-related claims, workers compensation, Workers Compensation Act, workflow,
working conditions, workplace, workplace injury, wrongful termination, wrongful
termination claim
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INDUSTRY AND LABOR SERVE UP $20 MINIMUM WAGE DEAL FOR FAST FOOD WORKERS

By Jonathan Slowik and Laura Vaughn on September 18, 2023 Posted in California
Labor & Employment Law, Minimum Wage, Wage and Hour

A two-year standoff between the fast food industry and labor unions ended this
week as stakeholders announced a deal that will increase the minimum wage to $20
for California workers at fast food chains with more than 60 locations
nationwide.

As we previously reported, in September 2022, California passed A.B. 257, which
created a 10-member fast-food council with authority to set wage, hour, and
working condition standards for fast food workers in California. The law was
vehemently opposed by the fast-food industry, who claimed the law would
devastate the industry.  Opponents raced to gather enough signatures to qualify
for a referendum on the November 2024 ballot to repeal the law, and on January
13, 2023, a Sacramento judge issued a preliminary injunction that prevented the
law from taking effect until California voters decided the fate of the
referendum.

In response to the referendum, the Legislature introduced a separate bill in
February 2023, A.B. 1228, that would make fast food franchisors jointly liable
for labor violations committed by their franchisees, potentially upending the
franchise model that dominates the industry. A.B. 1228 was passed by the State
Assembly in June but has not yet been approved by the Senate.  Over the summer,
California lawmakers also attempted to revive the Industrial Welfare Commission
(“IWC”), which was defunded almost two decades ago.  A revived IWC would have
the authority to pass regulations to protect fast food workers in the event A.B.
257 was repealed.

Last week’s compromise, detailed in changes to A.B. 1228, appears to put an end
to this legislative arms race for now.  Pursuant to the deal, the $20 fast food
minimum wage will take effect April 2024, and the referendum to repeal A.B. 257
will be withdrawn.  In exchange, the franchisor joint liability provision will
be taken out, the IWC will remain unfunded, and certain modifications will be
made to the fast-food council created in A.B. 257 to give it less sweeping
powers and ensure it has representatives from industry and franchisees.

The bill was approved by the California legislature on Thursday and is expected
to be signed into law by Governor Gavin Newsom.  When their wage rate increases
to $20 per hour in April 2024, fast food workers will have the highest minimum
wage in California.

Tags: franchise, minimum wage, new California law
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NINTH CIRCUIT BROADLY CONSTRUES EXEMPTION TO FEDERAL ARBITRATION ACT

By Gregory Knopp and Jennifer McDermott on September 12, 2023 Posted in
Arbitration Agreements, California Labor & Employment Law, FAA

The Ninth Circuit recently issued an opinion that signals some movement in the
direction away from enforcing employment-related arbitration agreements.

In Miller v. Amazon.com, Case No. 2:21-cv-00204-BJR, the Ninth Circuit affirmed
the district court’s order denying Amazon’s motion to compel arbitration in a
case brought by Amazon Flex delivery drivers who made last-leg deliveries of
goods shipped from other states or countries to consumers, as well as
tip-eligible deliveries of food, groceries, and packages stored locally.  In the
complaint, the plaintiffs alleged that Amazon violated state laws by failing to
honor its promise that workers would receive 100% of the tips that customers
added for deliveries of local goods.

Amazon argued that the Ninth Circuit’s decision in Rittmann v. Amazon.com was no
longer good law in light of the U.S. Supreme Court’s decision in Southwest
Airlines Co. v. Saxon.  In Rittmann, the Ninth Circuit held that Amazon Flex
delivery drivers—like the plaintiffs in Miller—were exempt from the Federal
Arbitration Act (“FAA”) because they were workers engaged in interstate commerce
since they delivered goods shipped from other states or countries to their final
destination.  Amazon argued Rittmann was no longer good law because in Saxon,
the Supreme Court explained that courts must look at the workers’ own activities
rather than the activities of the business for which they worked when
determining whether an employee belongs to a class of workers engaged in
interstate commerce under § 1 of the FAA.  The Court declined to revisit its
decision in Rittmann and stated that Rittmann remains binding precedent after
Saxon.

Amazon also argued that, even if Rittmann remained good law, the Court should
find that the FAA applied to the plaintiffs in Miller because they differed from
the plaintiffs in Rittmann since they scheduled tip-eligible local deliveries,
which did not involve interstate commerce.  The Court rejected Amazon’s argument
holding that plaintiffs were the “exact same class of workers we discussed in
Rittmann:  Amazon Flex delivery drivers who ‘are engaged to deliver packages
from out of state or out of the country, even if they also deliver food from
local restaurants.’”  Accordingly, the plaintiffs were engaged in interstate
commerce—even if that engagement also involved intrastate activities.  Relying
on Saxon, the Court noted that “the relevant question is what work ‘the members
of the class, as a whole, typically carry out,’ which here includes last-mile
deliveries.”  Since Amazon Flex delivery drivers have “one contract of
employment which governs all of their work, including shifts for last-mile
deliveries and shifts for tip-producing deliveries,” the plaintiffs in
Miller—like in Rittmann—were exempt under § 1 of the FAA.

Finally, Amazon argued that even if plaintiffs were exempt under the FAA, the
arbitration provision should be enforced under state law.  Again, the Court
disagreed explaining that no state law applied to plaintiffs’ arbitration
provision.  While a subsequent amendment to the arbitration agreement required
enforcement of the provision under Delaware state law, the amendment did not
apply to the plaintiffs because their agreement stated that any modifications to
the arbitration provision would not apply to claims that accrued or to disputes
that arose prior to such modification, as was the case here.

Notably, in both Miller and Rittmann, the Ninth Circuit adopted a somewhat broad
interpretation of Saxon and shielded employees from forced arbitration.  Given
the recent criticism of employment-related arbitration agreements, these cases
suggest a continued shift away from enforcing such agreements.  We will continue
to closely monitor these developments.

Tags: arbitration, FAA, Ninth Circuit Court of Appeals
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CALIFORNIA EXPANDS PROHIBITION AGAINST NON-COMPETES

By Tony Oncidi and Jennifer McDermott on September 11, 2023 Posted in California
Labor & Employment Law, New and Proposed Laws and Legislation, Non-Competition
Covenants

On September 1, 2023, California Governor Gavin Newsom signed Senate Bill 699,
which amends California Business & Professions Code Section 16600 to prohibit an
employer from entering into or attempting to enforce a non-compete agreement
regardless of whether the contract was signed outside of California.  The law
goes into effect on January 1, 2024.

Previously, California law banned non-compete agreements, subject to limited
exceptions.  Section 16600 of the California Business and Profession Code states
that “every contract by which anyone is restrained from engaging in a lawful
profession, trade, or business of any kind is to that extent void.”  By adding
Section 16600.5 to the Business & Professions Code, SB 699 expands the
restrictions on non-compete agreements to contracts entered outside of
California.

The legislative findings in the bill detail the public policy interests driving
the expansion of Section 16600.  While non-compete clauses in employment
contracts are extremely common throughout the United States, research has shown
that they “stifle economic development, limit firms’ ability to hire[,] and
depress innovation and growth.”  The legislature suggested that California has
“benefited significantly[]” from prohibiting non-compete agreements, “fueling
competition, entrepreneurship, innovation, job and wage growth, equality, and
economic development.”  Since “the market for talent has become national and
remote work has grown, California employers increasingly face the challenge of
employers outside of California attempting to prevent the hiring of former
employees.”  SB 699 preserves California’s competitive business interests by
“protecting the freedom of movement of persons whom California-based employers
wish to employ to provide services in California.”

Under the new law, any contract that is void under Section 16600 is
unenforceable “regardless of where and when the contract was signed.”  It
prohibits “an employer or former employer from attempting to enforce a contract
that is void regardless of whether the contract was signed and the employment
was maintained outside of California.”  Furthermore, the law provides that an
employer who violates the law commits a “civil violation.”  To that end, it
authorizes an employee, former employee, or prospective employee to bring a
lawsuit to enforce the law by seeking injunctive relief, actual damages, or
both, and entitles a prevailing employee to recover reasonable attorneys’ fees
and costs.

Notably, SB 699 cements California’s public policy interests against non-compete
agreements and expands employees’ enforcement rights for challenging non-compete
agreements in California.  The law will likely lead to even more legal battles
between California employers and out-of-state employers seeking to prevent
former employees from working for California competitors.  It will be
interesting to see the effect that SB 699 will have on out-of-state employers
that have secured a judgment enforcing a non-compete in another state, such as
in Advanced Bionics Corp. v. Medtronic, Inc., 29 Cal. 4th 697 (2002), in which
the California Supreme Court held that comity principles impose limits to the
scope of Section 16600 and to the reach of California’s public policy
disfavoring non-competes.

In Advanced Bionics, an employee signed an enforceable non-compete in Minnesota
with Medtronic and thereafter resigned his employment and went to work for
Advanced Bionics, a California competitor to Medtronic.  Simultaneous litigation
ensued in both California and Minnesota, but the California Supreme Court
declined to apply California law voiding non-competes to the Minnesota
agreement, explaining that “exceptional circumstances [did not exist] that
outweigh[ed] the threat to judicial restraint and comity principles.”  While it
remains to be seen how if at all SB 699 will be harmonized with the comity
principles set forth in Advanced Bionics, the new law will make it more likely
than ever that out-of-state employers will commence litigation early and often
against employees in their home jurisdictions who are moving to California in an
effort to enforce the non-compete before a California court can get around to
striking down the provision.

We will continue to closely monitor these developments.

Tags: Ninth Circuit Court of Appeals, non-compete, SB 699
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