Hunton Employment & Labor Perspectives

Our California labor and employment team has been nominated by Benchmark Litigation as a California – Labor & Employment Litigation Firm of the Year, and Partner Roland Juarez  has been nominated as a California – Labor & Employment Litigation Attorney of the Year.

If your background check forms include too much information about rights under state law, or even grammatical errors, you might be in trouble according to the Ninth Circuit.  In Gilberg v. California Check Cashing Stores, the appeals court recently ruled against an employer for using background check disclosure forms that violate both the federal Fair Credit Reporting Act (FCRA), and California’s Investigative Consumer Reporting Agencies Act (ICRAA).

As we discussed in a previous post , the courts, the Congress, and the Department of Justice (the “DoJ”) continue to grapple with the scope of Title III of the Americans with Disabilities Act (the “ADA”) as it relates to the accessibility of private businesses’ websites for disabled people.  A decision by one state trial court in California seems to adopt a more strict reading of the definition of “public accommodation” than previous cases in California and in the Ninth Circuit Court of Appeals (which includes the federal courts in California) on the subject, which further demonstrates the difficulty that many courts, including this one, are having with these ADA website accessibility cases.

The California Second Appellate District has held that retail employees who were required to “call in” two hours before their scheduled shift to find out if they actually needed to report to work were entitled to reporting time pay. The Court held that California retail employees do not need to physically appear at the workplace in order to “report for work,” and be entitled to reporting time pay, under the Industrial Welfare Commission (“IWC”) Wage Order 7.  Given the robust dissent and sweeping change this decision could bring about, this is a case to watch as it may find its way to the California Supreme Court.

What are newly elected Governor Gavin Newsom’s views on #MeToo legislation, and how do they compare to those of his predecessor, Jerry Brown?  We may soon have answers to these questions thanks to a pair of bills introduced by Assemblywoman Lorena Gonzalez (D-San Diego), which reintroduce harassment-related proposals vetoed by Governor Brown.

As we move closer to implementation of the California Consumer Privacy Act of 2018 (“CCPA”), companies should consider how the new law could affect their operations in multiple ways – including, for example, data collected through their employee benefit plans.

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Effective January 1, 2019, California’s minimum wage increased from $11.00 to $12.00 per hour. This increase applies to all employers who employ 26 or more employees (“large employers”).  For employers with 25 or fewer employees (“small employers”), the minimum wage increased from $10.50 to $11.00 per hour. (In fact, all employers ultimately will pay a statewide minimum wage of $15.00 per hour, although the timing of the increase depends on the employer’s size: for large employers, California’s minimum wage will increase by $1.00 on a yearly basis through January 1, 2022, and for small employers, California’s minimum wage will increase by $1.00 on a yearly basis through January 1, 2023. Cal. Lab. Code § 1182.12).

California’s legislature and courts have acted to curb an employer’s ability to recover its fees and costs when it prevails in a lawsuit brought under California’s Fair Employment and Housing Act (“FEHA”, Government Code § 12940 et seq.), even if the plaintiff employee rejected the employer’s Code of Civil Procedure Section 998 offer to compromise.

In Hernandez v. Pacific Bell Co., a California court held that employees who drive between their homes and a client worksite (in this case, a customer’s residence) using a company vehicle under the company’s voluntary vehicle take-home program need not be compensated for the commute time.

In the recent election, Californians voted to add an employer-friendly provision to the Labor Code that allows emergency ambulance workers to be on-call during breaks.  California is one of 24 states that allow voters to initiate laws through the petition process.

The U.S. District Court for the Northern District of California is a popular venue for class action lawsuits.  As of November 1, 2018, it is also the first to require parties settling such lawsuits to make broad public disclosures regarding the settlements.

In the wake of the #MeToo movement, many state legislatures have begun to take action to provide greater protections for victims of sexual harassment and make it easier for them to make complaints in the workplace.  For example, in California, AB 2770 amends Civil Code Section 47 to protect alleged victims of sexual harassment by a co-worker in making complaints to the employer without the fear of being found liable for defaming the alleged harasser.  It similarly protects employers when making statements to interested parties (such as the Department of Fair Employment and Housing and/or Equal Employment Opportunity Commission) concerning the complaints of sexual harassment.  In both instances, however, the statements and/or complaints are only protected from liability for defamation if they are made without malice and based upon credible evidence.

According to the National Human Trafficking Hotline, California has had the highest number of reported cases of human trafficking in the country over the last six years, followed by Texas and Florida.  Human trafficking victims include men and women, adults and children, and foreign nationals and United States citizens. Recent studies indicate that hotels and motels are common locations for sex trafficking.

In light of these startling statistics, now is a good time for employers to become informed about new legislation associated with human trafficking crimes and to implement or update their anti-human trafficking policies and practices.

Sexual harassment is a recurring theme in the bills signed into law by California Governor Jerry Brown on September 30, 2018.  These new laws, which take effect on January 1, 2019, continue the trend of expanding protections for California employees.

 Hush-Money – Three of the bills signed by Governor Brown on September 30 target settlement agreements that prohibit disclosure of sexual harassment claims. AB 3109 makes void and unenforceable any provision in a contract or settlement agreement that waives a party’s right to testify in an administrative, legislative, or judicial proceeding concerning alleged criminal conduct or sexual harassment.  SB 820 prohibits settlement agreements from including a provision that prevents the disclosure of factual information related to claims of sexual assault and sexual harassment.  However, this bill does not prohibit confidentiality of the settlement amount.  SB 1300 voids any agreement in which an employee forfeits his or her right to disclose unlawful acts in the workplace, including acts of sexual harassment.

Redefining The Hostile Work Environment Standard – SB 1300 also declares that a single incident of harassing conduct could be sufficient to create a triable issue regarding the existence of a hostile work environment in certain circumstances.

When negotiating a settlement agreement in an employment dispute, “no rehire” language is often a standard term.  This language typically bars the litigating employee from seeking re-employment with the former employer.  However, in California, at least one “no rehire” provision was invalidated because it was not narrowly tailored to the employer at issue.

In Golden v. California Emergency Physicians Medical Group (“CEP”), CEP terminated Dr. Golden’s employment, and he subsequently filed a lawsuit alleging racial discrimination.  The parties settled Dr. Golden’s claims, and CEP included a “no rehire” provision in the settlement agreement.  The provision states:

The California Supreme Court has ruled that California employers cannot rely on the federal de minimis doctrine to avoid claims for unpaid wages on small amounts of time.   Under the de minimis doctrine, employers may be excused from paying workers for small amounts of otherwise compensable time if the work is irregular and administratively difficult to record.  Federal Courts have frequently found that daily periods of approximately 10 minutes are de minimis even though otherwise compensable.

In Troester v. Starbucks Corporation, the California Supreme Court held that California wage and hour laws have not adopted the FLSA’s de minimis doctrine.  As a result, Starbucks was not permitted to avoid paying an employee who regularly spent several minutes per shift working off-the-clock.  The Supreme Court acknowledged, however, that there may be circumstances involving “employee activities that are so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for the time spent on them.”

California was one of the leading states to tackle pay discrimination by banning inquiries into salary history.  California Labor Code Section 432.3, which went into effect on January 1, 2018, prohibits public and private employers from seeking or relying upon the salary history of applicants for employment.  But some of the law’s terms were undefined and some of the provisions were unclear, so after Section 432.3 went into effect, employers had questions about how to remain compliant with the law when hiring new employees.

In AHMC Healthcare, Inc. v. Superior Court of Los Angeles County, No. B285655 (June 25, 2018) (“AHMC Healthcare”), California’s Second District Court of Appeals upheld an employer’s use of a payroll system that automatically rounds employee time up or down to the nearest quarter hour.  Although the California Supreme Court has not yet addressed this issue, AHMC Healthcare aligns with decisions from the federal Ninth Circuit Court of Appeals, many federal district courts, and California’s Fourth District Court of Appeals, which also upheld time-rounding practices.

The Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d)(2), confers federal subject matter removal jurisdiction over purported class actions filed in state court when, among other things, there is an amount-in-controversry (“AIC”) exceeding $5,000,000.  Deciding whether a class action can be properly removed under CAFA typically turns on whether this high jurisdictional threshold can be met.

The Supreme Court of California has ruled that a general liability insurer must defend an employer against allegations of employee misconduct, reinforcing the breadth of (1) what constitutes an “occurrence” under an employer’s commercial general liability (CGL) policy and (2) the duty to defend regarding claims for negligent hiring, retention and supervision.

New regulations addressing national origin discrimination under California’s Fair Employment and Housing Act (FEHA) go into effect on July 1, 2018 – are you ready?  The regulations expand the definition of “national origin,” make language restrictions presumptively unlawful, and limit an employer’s ability to verify immigration status, among other significant changes.

California is the land of employment legislation, and 2018 is shaping up to be another year of change. We are less than six months into the year, and already several bills that could significantly impact California businesses—for better or for worse—are pending in the California legislature.

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In a time when workplace violence seems to be on the rise, many companies have adopted a strict no tolerance policy even for conduct outside the workplace.  In California, however, employers need to be cognizant of the protections afforded individuals that may make such terminations riskier than the company may expect.  One employer got just such a reminder last week when a California jury returned an $18M verdict against it for terminating an employee after he was arrested for threatening his girlfriend outside of the workplace.

When a franchisor provides a California franchisee with detailed instructions about how to operate the franchise business, but allows the franchisee to manage its own workforce, can the franchisor be held liable for the franchisee’s wage and hour violations?  The California Court of Appeals found the answer to be no under the facts in Curry v. Equilon Enterprises, LLC, 2018 WL 1959472 (Cal. Ct. App. Apr. 26, 2018).  There, the Court of Appeals concluded Equilon Enterprises, LLC, doing business as Shell Oil Products US (“Shell”), was not liable for the alleged wage and hour violations of the company that operated its Shell-branded gas stations throughout California.

The California Supreme Court has adopted a new three-part test to determine whether a worker is an independent contractor or an employee under California’s wage orders, which regulate wages, hours, and working conditions.  The highly anticipated ruling could have wide ranging effects for businesses operating in California and beyond, as companies try to navigate the new gig economy.

The California Supreme Court issued a decision Monday in a case that is sure to cause headaches for employers when compensating employees through flat sum bonuses.  In Alvarado v. Dart Container Corporation of California (S232607) the Court held that for purposes of calculating the regular rate, a flat sum bonus is to be allocated only to the nonovertime hours worked. This holding departs from the calculation methods broadly considered compliant outside of California under the Fair Labor Standards Act (“FLSA”) and regulations issued by the U.S. Department of Labor.

In a highly anticipated opinion, a Federal Judge in California ruled in favor of GrubHub, an internet food ordering service, finding it properly classified a delivery driver as an independent contractor.

In Lawson v. GrubHub, the plaintiff, a delivery driver, alleged that GrubHub violated California’s minimum wage, overtime and employee expense reimbursement laws by misclassifying him as an independent contractor when he was really an employee.  He brought the case on behalf of himself and as a representative action pursuant to the California Private Attorney General Act (PAGA).

Driven by the wave of publicity surrounding sexual harassment allegations against prominent artists, executives, news anchors, filmmakers and legislators, and the ensuing #MeToo movement, legislators in California and several other states recently have introduced bills designed to prevent such harassment.  Below we summarize four bills introduced in the California Senate and Assembly in January 2018.  Employer groups have not yet publicly mounted a challenge to any of these bills, and it is not possible to say which, if any, of these bills will move all the way through the legislative process and be signed into law by the Governor.

The new year brings new laws for California employers to grapple with. Below we highlight the most significant new employment laws affecting California employers as of January 1, 2018.  Companies based in California or with operations in California are encouraged to review their policies and procedures in light of these developments.