Should your company have mandatory arbitration agreements with its employees? Having tried and arbitrated dozens of cases on behalf of employers, here are what I see as the pros and cons.
- There are no runaway, emotion-fueled jury verdicts.
- The procedures (including discovery) are more streamlined.
- Arbitration is more private than court trials. So there’s less risk of media attention.
- The cases settle more cheaply.
- The cases usually proceed more quickly in arbitration than in court.
- The attorneys’ fees are usually lower.
- If you win, the other side’s opportunity to appeal is very limited.
- You can require employees to waive the right to pursue class actions.
- It’s easier for unrepresented parties to bring weak claims.
- Forum and arbitrator costs are higher.
- The law about enforceability of arbitration agreements remains unclear. For example, the California Supreme Court has said “no” to mandatory arbitration of Private Attorney General Act claims (although the Supreme Court may have the last word). Also, there have been repeated efforts in Congress to outlaw the practice.
- Employees generally don’t like losing access to jury trials.
- If you lose at arbitration, your opportunity to appeal is very limited.
- It may be harder to get cases out on dismissal or summary judgment.
- While it hasn’t been my experience, some say that arbitrators tend to “split the baby.” (How I hate that cliché! I don’t like “throwing out the baby with the bath water” either. Leave the poor baby alone!)
The Deciding Factor:
Most cases end up settling and cases subject to arbitration settle more cheaply. The fact that there’s no risk of an excessive jury verdict changes the whole settlement calculation. Employees and their attorneys can’t base their negotiation position on the fact that, if they just get before a jury, they have a shot at a huge verdict.
If you’re an employer who doesn’t have arbitration agreements with your workers, seriously consider whether it’s time to develop one.
The hotel industry failed in its herculean effort to prevent the July 1, 2015 implementation of the Los Angeles Hotel Minimum Wage Ordinance. The Court denied the Hotel Associations’ motion for preliminary injunction previously reported on here, here, and here.
The Court conceded that “Plaintiff’s biggest concern with the $15.37 per hour minimum wage provision is that it is bad economic policy.” The Court further admitted that “[t]here are certainly grounds for this concern.”
Yet per the Court, “[t]he point is this: it is not the role of the courts to interject into matters of legislative economic policy under the guise of NLRA preemption, and Plaintiffs have not met their burden that the Wage Ordinance’s $15.37 per hour minimum wage provision is anything but a permissible exercise of the City’s power to institute such economic policy.”
The Court said that the Hotel Associations did not meet their burden to show that the $15.37 hourly rate was “so onerous that it is economically unfeasible and therefore forces the hand of non-union hotels to unionize.” Nor did they meet their burden to show that the “waiver provision interferes with collective bargaining and labor relations or is otherwise inconsistent with the NLRA’s legislative goals or purposes.”
Why does this matter? Well, if you’re a hotel in the city of Los Angeles with 300+ rooms, the new minimum wage rate goes into effect on July 1st. For hotels with 150+ rooms, the new wage rate goes into effect on July 1, 2016. For everyone else, the ripple effects of an increase in minimum wage in one sector of the local economy will almost certainly impact others. Moreover, it’s very possible we will see more such ordinances, or a city or county wide minimum wage increase across industries.
You can find details about the specific requirements of the Los Angeles Hotel Minimum Wage Ordinance here.
Until last week, employers who prevailed in discrimination actions under California’s Fair Employment and Housing Act – like all other litigants – were entitled to recover certain statutory court costs. These included such costs as filing fees, jury fees, and deposition costs. That all changed with the California Supreme Court’s May 4, 2015 decision in Williams v. Chino Valley Ind. Fire Protection Dist.
According to the Court, for employers who prevail in FEHA actions to recover those costs, they must meet the same standard used to award attorneys’ fees. That is, the prevailing employer must show that the plaintiff’s claims were frivolous, unreasonable, or groundless. Prevailing plaintiffs in these lawsuits continue to receive awards of fees and costs automatically.
The courts rationalize this distinction by saying they don’t want to discourage employees from bringing potentially valid claims. But where is the concern for a system that encourages groundless claims? Because in that regard, we just dropped the bar a little lower.
What can employers do?
- The best option is obviously to avoid employment claims in the first place. We’ve discussed here, here, here, and here ways to try to do that.
- If you can’t avoid a lawsuit, there are a variety of ways to try to make plaintiffs potentially responsible for all or some of your attorneys’ fees, such as requests for admissions, offers of judgment, and sanctions motions.
- Also, if you can’t increase the plaintiffs’ downside, try to decrease their upside. Mandatory arbitration agreements reduce the likelihood of the plaintiff obtaining an exorbitant, emotion-fueled recovery.
On May 1st, the San Francisco Minimum Wage increased to $12.25 per hour. That also means that San Francisco employers are required to display the updated poster – that you can download here. That’s the 2nd increase this year, with further increases scheduled for July 1, 2016 ($13 per hour), July 1, 2017 ($14 per hour), and July 1, 2018 ($15 per hour).
Under SF’s Minimum Wage Ordinance, The poster must be displayed “in a conspicuous place at any workplace or job site where any Employee works…..”
Instead of making all these separate increases, why don’t we just make the minimum wage $5000. Then everyone who works full time for a year will make a million dollars and all society’s problems will be solved! Right?
If an employee is required to be available by radio, pager, mobile phone, or the like on a rest break, does it count as a rest break? Like so much of California employment law, it depends on whom you ask.
We previously reported on Augustus v. ABM, where the court of appeal answered that question: “Yes,” explaining that requiring someone to be available to work wasn’t the same as requiring them to work. In fact, we got a little glib about starting off the new year with good news.
Now, the California Supreme Court has granted review and will decide the issue anew. So, for now, the answer to the question is a clear “Maybe.”
- The conservative response to this development would be to have employees, whenever practicable, hand-off their communication devices (other than personal cell phones) during rest breaks.
- The standard for meal periods is different. There’s no question for meal periods that employees must be “relieved of all duty.”
- Anytime I use “California,” “employment law,” and “good news” together in a sentence, assume that we’re just waiting for the other shoe to drop.
I’ve written before about why lawyers who defend employers hate performance reviews. Here are tips to writing performance reviews we’ll hate less:
- Spell Check is your friend. Use it. It’s very hard to defend a manager’s criticism about an employee’s attention to detail when the manager writes a review that’s full of typos.
- Life is not a popularity contest. If there are performance problems, you need to identify them even if you think doing so will make you unpopular.
- Don’t sugarcoat it. If someone’s not meeting expectations, say so. (Yes. This is another way of saying the same thing as number 2, but it bears repeating.)
- Don’t mention health issues. There is a time and place to explore whether an employee requires accommodation for a disability. It’s not in a performance evaluation. Blurring the distinction enables employees to portray themselves as victims of disability discrimination.
- Don’t just check boxes. Explain. Give examples. Be factual.
- Follow your policy. If it says evaluations are given every six months, give them every six months. An employee who didn’t receive his review has an easier time arguing the company didn’t explain what it expected.
- Either learn statistics or just accept the fact that, outside of children in Lake Wobegon, not everyone can be above average.
- Have the employee sign. Without a signature, the likelihood of the employee denying receiving the feedback skyrockets. They don’t need to say they agree with the evaluation, just that they received it.
Properly done, performance reviews help workers do their best work. But more importantly, they’ll make your employment lawyer a little less crazy.
As previously discussed, the California Department of Industrial Relations, which will enforce California’s new Paid Sick Leave law, put out a webinar to discuss compliance issues. According to the webinar, requiring employees to provide doctors’ notes could be construed as unlawful interference with their statutory right to the leave.
Nothing in the statute specifically addresses whether employers can ask for doctors’ notes. But it’s such a well-established practice with similar types of leave, that it seemed safe to assume it was allowable. Still, somehow the DIR has interpreted the statute to say that denying Paid Sick Leave for failure to provide a doctor’s note may be unlawful.
If Paid Sick Leave is intended to provide a benefit for employees who validly need it, prohibiting doctors’ notes is ridiculous. If, instead, the law is intended as another way to subject well-meaning employers to expensive lawsuits and agency enforcement actions, then it makes perfect sense.
The equivocal statement in the webinar, that the DIR believes that asking for a doctor’s note may be unlawful, does not have the force of law. We’ll continue to watch this issue over the 2 months before the law takes effect and report any developments.
Several Fox Rothschild attorneys are participating in the California Women Lawyers Annual Conference on May 8th in Burlingame, CA. Founded in 1974, CWL is the only statewide bar association for women attorneys in California.
Connie L. Chen is the co-chair for the Conference, whose theme will be “Pathways to Equality and Success.” There will be networking sessions and eight different panels on issues affecting women in law and society, including employment issues female attorneys face.
As part of a panel on the complicated cluster of evolving laws dealing with pregnancy and employment, Nancy Yaffe will provide guidance useful to pregnant women and their employers.
Yesenia M. Gallegos will share her insights on the panel: “Mentors, Sponsors, and Coaches: How to Enhance Your Career Trajectory.”
We hope to see you there! Register here by May 4. MCLE credit is available.
California’s Department of Industrial Relations recently held a public webinar about the Paid Sick Leave that California employers must begin providing on July 1, 2015. We’ve discussed what the law requires generally here and here.
The DIR listed these 6 steps for employers to successfully comply with this law:
- Display the paid sick leave poster where it’s accessible and have a paid sick leave policy.
- Give new hires written notice about the company’s paid sick leave policy.
- Provide for accrual of at least one hour of paid sick leave for 30 hours of work.
- Allow eligible employees to use paid sick leave upon request.
- Show employees how many hours of paid sick leave they have available either on the pay stub or a separate document issued the same day as the paycheck.
- Keep records showing how many hours employees have earned and used for three years.
Here’s a link to the webinar and the slides from the Department of Industrial Relations. July 1, 2015 is around the corner. Employers that don’t have their ducks in a row should get going on this now.
While I certainly don’t want to downplay the importance of employers following the law, one rule will keep employers out of trouble in most situations: be fair.
Did the employer gather all available information before making a decision? Did the employee know what was expected of him or her? Were the expectations reasonable? Was the employee given specific feedback and a chance to improve? Were like cases treated the same? Did the decision-maker have reason to be biased?
If you can show that the decision was fair, it’s often much easier to show that it was legal. If you can’t, it’s an uphill battle.