In reading all of the online reviews about the Game of Thrones finale, I was struck by one overarching theme – you just can’t please everyone.  In that regard, it reminded me a lot of employment litigation.  Spoiler alert!

Some fans thought the ending was too clean and tidy, too happy in some respects, with Sansa crowned Queen of the North, Arya heading off to new adventures (and likely a spinoff), Tyrion running things for the new Broken King, and weary Jon Snow finding comfort in his wildling friends and reunited with an earless Ghost.

  • Litigation parallel:  With any litigation, there are lots of skirmishes and battles along the way, but generally one side winds up with a happier ending than the other.  And more often than not, a win isn’t a full win given the costs along the way.

Other fans thought certain plot lines were too contrived, and untethered to the past seven seasons of character development.  For example, Daenerys’ decline into the evil mad queen, and Grey Worm’s plummet into a heartless assassin.

  • Litigation parallel:  Reminds me of how often a  judge, jury, or even opposing counsel focuses on some random bit of evidence or case law, but not the exact evidence or precedent you wanted them to, leading them to a different spin on the outcome from what you intended.  “How did they read my carefully crafted brief and come up with that?” we often wonder.

Still even more fans posted, blogged and tweeted their frustration that the writers were not “getting it right” and had botched the entire last epic season.  Why would Jamie go back to Cersei?  Why on earth was Tyrion being so stupid if he was supposed to be the smartest guy in Westeros?  Why didn’t Cersei just kill all of her enemies when she had the chance and they were all just standing there in front of her?  Why were there still gratuitous brothel scenes for goodness sakes after all of the cries about misogyny in the series?  And why on earth was Rhaegal killed so easily by the Iron Fleet, yet Drogon managed to evade every single scorpion bolt?  Fans were disappointed, so much that many petitioned HBO for a season 8 do-over.

  • Litigation parallel:  Ah, the illusion of control.  In litigation we try to control the court, opposing counsel, the witnesses, and our clients.  But as hard as we try, some (or all) of the above can go rogue.  And as litigators we can plan, but we certainly can’t fully control the outcome.  As I often tell clients, in litigation there is no 100%, even with strong facts I still discount chance of success to 80%.

Game of Thrones was a lot like employment litigation.  Lots of unpredictable twists and turns.  A good result for some, but not all.  Often a high price for what you get.  Limited emotional satisfaction, even when you ultimately prevail.

One could sum up the Game of Thrones ultimate theme as:  There must be a better way than endless war and male heirs with birthrights.  But the suggestion from Tarly that the people choose a leader was met with hearty guffaws from the elite leaders.  Sure sounds like parties in litigation to me.  Give up my sense of right and wrong to compromise for the greater good?  No way!

I guess that’s why litigation is here to stay.  But don’t kid yourself, the ending will likely be less satisfying than you think.

The California Consumer Privacy Act (CCPA), a broad-based law protecting information that identifies California residents, was passed in June 2018 and will take effect in 2020. Dubbed “GDPR Lite,” to denote its similarities to the EU General Data Protection Regulation (GDPR), it is expected to be a game-changer for U.S.-based companies that process sensitive data. With detailed disclosure requirements, a grant of extensive rights to individuals to control how their personal information is used, statutory fines and a private right of action, the law requires companies to rethink their data processing practices.

But does the CCPA apply to you?

CCPA applies to you if you fall within either A or B, below:

A.    (1) You are a for-profit business.

(2) You collect California consumers’ personal information (or such information is collected on your behalf) and determine the purposes and means of processing California consumers’ personal information.

(3) You do business in the state of California.

and

(4) You meet one of the following criteria:

(a) You have at least $25 million in annual gross revenues.

(b) You buy, sell, share and/or receive the personal information of at least 50,000 California consumers, households or devices, per year.

(c) You derive at least 50 percent of your annual revenue from selling California consumers’ personal information.

OR

B. You control or are controlled by an entity that meets the above criteria and share common branding with that entity.

Let’s break that down.

Section A:

1. You are a “for profit” business

CCPA applies to companies that are “organized or operated for the profit or financial benefit of [their] shareholders or other holders.”

Nonprofits are not required to comply with the CCPA. However, if you are a nonprofit organization that controls or is controlled by a for-profit entity that qualifies as a “business” and share common branding with, or receive personal information from a business via a “sale,” you could be subject to CCPA.

2. You collect and determine the purpose and means of processing personal information of Californians

You meet this prong if:

  • You receive, buy, rent or access information (including personal information collected passively, i.e. through cookies); and
  • Determine the purpose and means of processing of information that both:
    • identifies, relates to, describes, is capable of being associated with or could reasonably be linked, directly or indirectly, with a particular consumer or household; and
    • pertains to an individual who is (1) in California for other than a temporary purpose, or (2) domiciled in California, but outside the state for a temporary purpose

3. You do business in the state of California – even if you have no physical presence in California

This phrase is not defined in CCPA. It has, under California tax laws, been deemed to apply, in certain cases, to companies doing business online without any physical presence in California.

So, in the absence of guidance from the California Attorney General, it is likely that this will include you if:

  • Your headquarters is in California.
  • You have employees in California.
  • You are an entity incorporated in California or an entity required to register in California as a “foreign entity” under existing California corporate and tax law. Per a recent amendment, starting April 1, 2019, companies not registered in California, with no physical presence in California, are required to register with the California Department of Tax and Fee Administration (CDTFA), collect the California use tax and pay the tax to the CDTFA based on the amount of sales into California if their sales exceed a certain dollar threshold or they have more than 200 separate transactions.
  • You have ties to the state including, in some cases, repeated sales into the state and ownership of real property in the state.

4. You meet one of the following thresholds

  • You have at least $25 million in annual gross revenues. [Note: It is unclear at this point whether the $25 million threshold will operate at the group level and whether revenue not derived from California will count, but the general thought is that this threshold applies to overall revenues, not just revenues from California.]
  • You buy, sell, share, and/or receive (alone or in combination with others) the personal information of at least 50,000 California consumers, households or devices, per year.
    [Note: To reach this threshold, 137 unique visits to your website a day suffices.]
    [Further note: CCPA does not explicitly require that a household be physically located in California or a device be owned by a California resident. Given that CCPA was enacted to protect the right to privacy spelled out in the California Constitution (see above) and such right is bestowed on California residents, such requirement may in the future be read into the statute.]
  • At least 50 percent of your annual revenue comes from selling California consumers’ personal information.

OR

Section B: You control or are controlled by a business

CCPA would also apply to you if you control or are controlled by an entity that meets the above criteria and share common branding with that entity. Therefore, CCPA applies to entities that do business in California and those that are part of the corporate group (parents or subsidiaries) of an entity that does business in California.

B+ You may indirectly be in scope if your B2B clients say so

In order to comply with obligations under CCPA, businesses that are subject to the law will need to ensure that their third party service providers use information in a way that allows the business to be compliant (e.g. delete the information when requested, use the information only as permitted). Therefore, you could be required to comply with CCPA provisions indirectly, through an agreement with your customer.

Finally: Can CCPA apply to me if I am not a consumer facing business (B2C)?  Yes.

Despite its “Consumer Privacy Act” title, as currently drafted, CCPA applies to any business that meets the criteria listed in question one above, even if it does not deal directly with consumers. The definition of “consumer” is also very broad and includes any individual who is (1) in California for other than a temporary purpose, or (2) domiciled in California but is outside the state for a temporary purpose.

It is not yet clear whether the CCPA applies to B2B companies with respect to business contacts who meet the criteria listed in question one and/or employees who are California residents. While the current language of the CCPA and definition of “consumer” appear to include employees and business contacts, the California State Assembly recently proposed AB-25, a bill that would exclude employees, contractors and agents from the definition of “consumer.” Specifically, the bill excludes a natural person whose personal information has been collected by a business in the course of a person acting as a job applicant to, an employee of, a contractor of or an agent on behalf of the business, to the extent the person’s personal information is collected and used solely for purposes compatible with the context of that person’s role as a job applicant, employee, contractor or agent of the business. The bill awaits final legislative action.

Odia Kagan is a Partner at Fox Rothschild and chair of the firm’s GDPR Compliance and International Privacy Practice. Odia leverages her experience counseling companies on GDPR compliance issues to assist companies on the road to CCPA compliance. For assistance, contact Odia at okagan@foxrothschild.com or 215.444.7313.

Additional Information

The topic of preferred pronouns has been top of mind for me lately.

It started with a volunteer mentor day I attended for Step Up (a fabulous group by the way) to mentor high school teens.  In our mentor orientation we were guided to introduce ourselves using our preferred pronouns.  We went around the room and practiced.  My introduction was:  Hi, I’m Nancy.  An employment attorney who helps businesses with their employee issues.  My preferred pronouns are she and her.

Then I heard this story on NPR last night on the way home from work.  It was all about how a non-binary individual (genderqueer) was delayed at an airport by a TSA screening device.  According to that story, those devices have a pink (for female) or a blue (for male) button that the TSA representative pushes when a person walks through.  If your anatomy doesn’t match the button pushed, it beeps, and you are delayed.

Earlier this week a client called with a question about gender neutral restrooms in a southern California manufacturing facility with separate male and female locker rooms.

I also recently watched the New York City sexual harassment training video that does a terrific job of explaining gender identity issues including the definitions of cisgender and transgender, as well as explaining the difference between gender identity and sexuality.

This all got me thinking about how this impacts CA employers and a few issues came to mind including:

  • Discussion of gender identity issues are a required part of harassment prevention training for all employees, as well as managers/supervisors in California.
  • Single-user restrooms under the employer’s control must be designated as gender neutral.
  • Employers with locker rooms will need to make accommodations as needed to address gender identity issues.
  • It is probably time for employment applications to either do away with the male vs. female check box and instead ask for preferred pronoun, or at least add it as an option.
  • It is also probably time for recruiters to ask all applicants their preferred pronoun.  Of course, asking only some people based on appearance could be perceived as discriminatory.

Getting used to using preferred pronouns is an issue that most California employers will likely need to address in the short term.  Why not be inclusive and ahead of the curve?

 

The California Supreme Court decision in Dynamex Operations West, Inc. v. Superior Court continues to change the legal landscape.  On May 2, 2019, the 9th Circuit Court of Appeal revived a decade old lawsuit, Vazquez v. Jan-Pro Franchising Int’l., applying Dynamex’s ABC test retroactively and dismissing substantial due process concerns.  While dismissing the defendant’s arguments against retroactive application, the 9th Circuit went on to render an extremely employee-friendly decision, solidifying two key points:  first, the ABC test is broadly applicable to cases involving California’s wage orders; and second, the court laid out – over ten pages of its decision – a roadmap to holding employers liable under the ABC test.

Person on road tile
Copyright: / 123RF Stock Photo

California employers should take notice of the breadth and scope of this decision.  The 9th Circuit did not ultimately apply the ABC test to the merits in Vazquez, choosing to leave that task to the Northern District of California.  But where it fell short of ruling on the merits, the 9th Circuit made clear that the ABC test is treacherous, invasive, and “extremely broad.”

The breadth of the decision is unmistakable when you consider the distance between the plaintiffs and their alleged employer under the three-tier franchise system at issue.  Under this system, a company (the top tier) may contract with franchisees, who in turn contract with subsequent, or “unit” franchises.  The 9th Circuit believes the ABC test is broad enough to find independent contractors of the unit franchise are actually employees of the top tier company.  (Is it just me, or does this sound like the employment law version of 6 degrees of separation?)

As if this wasn’t enough, the Court went on to offer “observations and guidance” – to the tune of ten pages – discussing how “Prong B of the ABC Test May Be the One Most Susceptible to Summary Judgment,” and laying out three theories upon which a plaintiff may successfully satisfy this prong:  (1) is the contractor’s business necessary or incidental to the company’s core business; (2) is the contractor’s work continuously performed for the hiring entity; and (3) what business the hiring entity claims to be in.  This is essentially a roadmap to fundamentally altering the relationship of millions of California’s independent contractors, and significantly expanding the definition of “employment.”

Vazquez is overtly employee-friendly, but it is not without a silver lining.  Where plaintiffs may use Vazquez as a roadmap to manufacturing litigation, employers can use it as a roadmap to escape.  Employers should carefully check agreements with their contractors against the ABC test, including the three Prong B tests discussed in Vazquez, to ensure they are properly classifying employees.  Just keep your eyes on the road.

California now has 39 separate minimum wages. First, you have two state minimum wages ($12 for employers with 26 or more employees; $11 for 25 or fewer). Then 27 cities have minimum wage ordinances, many of which have multiple minimum wages for different categories of employers. How can anyone keep up with this all?

Easy! Tyreen Torner has made you this handy chart. Isn’t Tyreen the best!?

In March 2019, the Social Security Administration resumed issuance of Employer Correction Request Notices, commonly referred to as “Social Security No-Match Letters.”

The No-Match Letters are being sent to businesses throughout the country that are identified as having a name and Social Security Number (SSN) combination submitted on wage and tax statement (Form W-2) that do not match SSA records. Employers may recall receiving these notices until 2012 when the Obama administration suspended these communications.

Employers receiving No-Match Letters in 2019 must take proper steps in addressing the request. Most importantly, employers should not assume that a No-Match Letter is proof of an unauthorized or undocumented worker; likewise, an employer cannot use the letter alone as a basis to take adverse action against an employee.

Upon receipt of a No-Match Letter, an employer should take the following initial steps :

  • CHECK the reported no-match information against its personnel records.
  • If the reported discrepancy cannot be resolved, INFORM the employee of the letter and ask the employee to confirm his or her name/SSN.
  • If the discrepancy still exists, ADVISE the employee, in writing, to contact the SSA to correct and/or update his or her SSA records and give the employee a reasonable period of time to resolve it.
  • SUBMIT corrections to the SSA.
  • If the employee does not respond or act to resolve the issue, CONTACT immigration counsel to discuss next steps and document a continued proactive response.

An employer’s failure to address a No-Match Letter and/or failure to follow-up with an employee and their progress towards resolving the no-match could lead to a finding by ICE of constructive knowledge of employing unauthorized workers.

Additionally, it is worth noting during an ICE Form I-9 Audit, the Notice of Inspection usually requests employer records concerning receipt of No-Match Letters and evidence as to how the company responded to the letter(s).

The reintroduction of No-Match Letters is a reminder for employers across the country in all industries of the need to ensure accurate records for wage-reporting and Forms I-9.

If you have any questions or wish to discuss strategy and response to a No-Match Letter and proactive steps to remediate Forms I-9, contact Ali Brodie at 303.446.3846 or abrodie@foxrothschild.com or any member of Fox Rothschild’s Immigration Practice Group.

If you had asked me a few years ago about ADA accessibility lawsuits, I would have talked about the importance of ensuring your business’s seating, aisles, and restrooms complied with the ADA accessibility guidelines.  Although plaintiffs continue to file lawsuits alleging barriers to physical accessibility, over the past two years, a new type of accessibility lawsuit has become very common.  Rather than focusing on physical barriers, more and more lawsuits are now being filed by visually-impaired plaintiffs alleging that the websites of businesses are inaccessible and violate Title III of the ADA.  These lawsuits typically allege that the visually-impaired plaintiff visited the website of a business and was unable to access all of the businesses products and services.  Because visually-impaired individuals often rely on screen-reading softwarePhoto: web accessibility online on internet website computer for handicap people with disabilities to access websites, if websites are not properly formatted in a way that allows the software to decipher the information, visually-impaired individuals may be unable to fully access the website.

California has been disproportionally hit with these website accessibility lawsuits, largely because of the Unruh Civil Rights Act (UCRA).  Although a plaintiff suing under Title III of the ADA is usually only entitled to equitable relief and attorney’s fees, under California’s UCRA, a plaintiff who establishes a violation of the ADA is also entitled to recover the greater of their actual damages or statutory damages equal to $4,000.

Perhaps it should come as no surprise that these claims have begun to spill over to the employment world.  The newest wrinkle we have seen involves visually-impaired job applicants who target employers that use online application portals which the applicants claim contain accessibility barriers.  These applicants have begun filing lawsuits alleging that these alleged barriers prevent them from equal access to apply for employment.  Rather than filing claims under Title III of the ADA (which applies to places of public accommodations), applicants sue under Title I of the ADA (which prohibits employers from discriminating against qualified disabled employees and job applicants.)  Not surprisingly, plaintiffs in California are also bringing claims alleging violations of the UCRA and the Fair Employment and Housing Act (FEHA) under similar legal theories.

While it is too soon to determine how receptive California courts will be to claims of employment discrimination based on allegedly inaccessible online application websites, we strongly recommend that employers and businesses regularly evaluate and update their websites to ensure they are accessible and comply with the Web Content Accessibility Guidelines (WCAG)  2.0 or 2.1, the current gold standards for ADA compliance.  A quick reference guide to the WCAG guidelines is available here: https://www.w3.org/WAI/WCAG21/quickref/   Remember, the best and only way to safeguard against a website accessibility lawsuit is to ensure your website is and remains accessible.

I attended a seminar at my firm last week that set forth the next big thing in California — the California Consumer Privacy Act (CCPA).  It is California’s version of the European Union’s General Data Protection Regulation (GDPR).

If you haven’t heard of it (or focused on it), the CCPA is a broad-based law protecting information that identifies California residents (both consumers and employees).  The law includes detailed disclosure requirements, provides individuals with extensive rights to control how their personal information is used, imposes statutory fines and creates a private right of action.  It is expected to dramatically alter the way U.S.-based companies process data.

While the CCPA won’t go into effect until 2020, it has a “12 month look back” which requires companies to be able to provide information to consumers about information collected or disclosed in the immediately preceding 12 months.  While changes to the CCPA are expected, smart companies are in the planning stages now.

Check out this terrific summary of the law by my partners Elizabeth Litten and Mark McCreary, as well as this alert from my partner, Odia Kagan, outlining the top five steps to start taking now to prepare for the CCPA.

The phrase “no good deed goes unpunished” applies in many contexts, including California employment law. Here are six ways that employers get into trouble by trying to do favors for their workers.

  1. Treating an employee as an independent contractor. Some workers want you to treat them as independent contractors so they aren’t subject to withholding. But even if they agree to it in writing, that doesn’t protect you from liability. First, if the workers change their minds and bring wage claims, you can be on the hook for a variety of penalties. These include penalties for not having issued proper wage statements, not providing meal and rest breaks, and not properly tracking the employees’ hours. In addition, the Employment Development Department, Franchise Tax Board, Internal Revenue Service, and others can pursue you for not properly withholding and paying payroll taxes.
  2. Paying employees in cash. Sometimes an employee may ask you to pay them under the table. Like paying them as contractors, you won’t have the pay records you’re required to maintain and the agencies that collect payroll taxes can come after you. You’re basically defrauding the government. They don’t like that and they’ll punish you if they find out.
  3. Allowing star employees flexibility to break the rules. It’s tempting to give top performers leeway when it comes to attendance, standards of behavior, and work rules generally. Don’t do it. Others can characterize it as favoritism, or even discrimination. It also makes it harder to hold other employees accountable for breaking those rules.
  4. Giving a terminated employee a glowing reference. Maybe you feel bad about firing someone and giving them a glowing reference eases your guilt. However, if the employee challenges the termination in court or arbitration, expect to get grilled on the conflict between the employee who was so bad you had to fire them and the employee described in your glowing reference letter. While you’re at it, you should also anticipate getting grilled on your demonstrated willingness to make false statements. Also, if their next employer relies to its detriment on untrue statements you made in the reference, it can sue you for fraud.
  5. Giving positive evaluations to underperformers. Don’t get me started! I’ve ranted about this enough, including here and here.
  6. Not terminating employees who deserve to be. No one likes firing people. But sometimes it’s necessary. If you retain employees who misbehave or consistently fail to meet performance standards, you get punished in two ways. First, it becomes harder to terminate that person later on. Second, it becomes harder to terminate others for similar shortcomings. Both problems arise because you’ve set a precedent of what you’ll tolerate.

On the other hand, if you weren’t willing to tolerate a certain level of punishment, why are you employing people in California to begin with?

I just returned (and yes, detoxed) from the Cornell HR in Hospitality Conference in Las Vegas.

I presented on wage-and-hour issues at the FLSA Unconference, and participated in a roundtable where attendees were able to “ask the attorney” all of their burning legal questions.  I also attended a bunch of terrific sessions to gain insight into the most salient topics facing hospitality employers in 2019.

Here are some take-aways that I found particularly meaningful (and helpful), so I thought I would share:

  • Recruiting and retention are big issues everywhere; one progressive company markets to prospective employees by sending them brand-based messages and gifts periodically (such as a donation to an environmental cause on their behalf in celebration of Earth Day)
  • Another innovative company has the following questions on its career page: Don’t see a position you are interested in? We always want to meet new talent. Contact us at XXX to let us know why we should meet.
  • We used to tell employees in harassment prevention training that there is no such thing as “free speech” at work; well that also works as way to address polarizing political discourse
  • In this day of cell phone recordings, managers and employees often suspect they are being secretly recorded; a good way to address that at a meeting is to say “I am not recording this conversation, are you?” – if the employee lies and records anyway, at least you have them on tape lying
  • Just because you may not have a “light duty” program for workers’ compensation, doesn’t mean that you get out of your duty to engage in the interactive process
  • Use your guest WiFi password as an opportunity to reinforce your brand; for example, our firm’s entertainment group is branded as “Entertainment Law. Coast to Coast” – so a password could be “coasttocoast”
  • Sexual harassment settlements are no longer tax deductible; but one option is to apportion part of the settlement to harassment based claims and deduct the rest

Next year the Conference is in Miami (April 26-29th).  Hope to see you there!