One of the hottest issues in employment law is Whistleblowing.

  • Did you ever wonder why the President can fire people who testify against him, but a California employer would be sued in a hot minute for doing so?
  • Or why certain high profile figures can be “handsy” or “flirty” (or way more) and get away with it, but others are being “outed” by victims with time-barred claims, crushed with job loss, litigation (and maybe even jail time) in the #MeToo era?
  • And did you know that even though most Whistleblowing statutes (such as California Labor Code Section 1102.5) do not provide for attorneys’ fees, that the Plaintiff’s bar is now arguing that PAGA applies?

If these issues keep you up at night (and they should), no worries.  Come to the Los Angeles County Bar Association’s 40th Annual Labor & Employment Law Symposium on March 11, 2020, and hear me and two colleagues from the “dark side” (i.e. Plaintiff’s bar), Gina Browne Olivares and David Myers, present on these hotly contested and very topical issues.

You can register here.  Hope to see you on March 11th!

Gig economy giants Uber and Postmates failed to convince U.S. District Judge Dolly Gee that she should grant an injunction to prevent enforcement of AB-5.  While seeking to halt enforcement of AB-5, the companies concurrently contend that the law does not apply to their drivers.  In case you’re just tuning in, AB-5 creates a legal presumption that all workers in California should be employees unless they pass a stringent ABC test or fall into a detailed exemption, which you can read more about here.

You may be familiar with the AB-5 ABC test, which provides that to establish independent contractor status in California beginning on January 1, 2020, employers must satisfy all three of the following prongs:

A) The company must not be able to control or direct what the worker does, either by contract or in actual practice;
B) The worker must perform tasks outside of the hiring entity’s usual course of business; and
C) The worker must be engaged in an independently established trade, occupation or business.

In the lawsuit, Uber and Postmates contend their delivery drivers  meet the ABC test and are properly classified as independent contractors, because the work performed is outside the usual course of their business.

But Uber and Postmates have not yet been forced to defend their position in court, despite a  tweet by Assemblymember Lorena Gonzalez asking local City Attorney’s office to actively enforce AB-5 against Uber specifically.  It remains to be seen whether cases will continue to settle through use of mandatory arbitration agreements, which is another hot topic.  Or, whether gig companies will be forced to defend their position, given the court’s refusal to halt enforcement of AB-5.  The companies’ request for an injunction claimed AB-5 was unconstitutional because it violated the equal protection and due process clauses of the Fourteenth Amendment, among other clauses.  But, today’s order found that AB-5 served a public interest and did not unlawfully target gig economy workers in violation of state or federal law.

Indeed, based off plain language of the bill and the many, many phone calls I have received since the law passed last fall, AB-5’s statutory language is broad and encompasses many more industries than just gig workers.  For companies still assessing their worker status or figuring out potential classification options, we have had many discussions surrounding:

  • The Uber approach and whether the “usual course of business” can be creatively defined.
  • The idea of utilizing a staffing agency as an employer (note joint employment concerns).
  • Whether a professional service exemption applies.
  • Whether a business to business exemption could apply.
  • Whether to pretend you’ve never heard of AB-5 (not recommended).

Any member of our team is happy to discuss the myriad of options and risks associated with AB-5, now that its enforcement has cleared one more constitutional hurdle.

AB 51, which restricts workplace arbitration, was scheduled to take effect on January 1, 2020. On December 30, 2019, US District Judge Kimberly Mueller granted a temporary restraining order to prevent the legislation from taking effect.  On January 31, 2020, she issued a preliminary injunction extending the ban, and promised to explain her reasoning in more detail later. On February 6, 2020, she provided that more detailed explanation.

AB 51 made it unlawful (even criminal) for anyone to require an applicant or employee to waive their right to have claims under the Fair Employment and Housing Act or Labor Code decided in court.  While the prohibition did not specifically mention arbitration, it was clear from the language and comments by the bill’s sponsors that that was the intent.

There is, however, a body of federal law (the Federal Arbitration Act) that prohibits states from imposing burdens or restrictions on arbitration agreements that they do not impose on other contracts. Former Governor Jerry Brown vetoed earlier versions of AB 51 because they ran afoul of federal law.  The drafters of AB 51 attempted to draft their way around the problems faced by the earlier bills. For one thing, AB 51 doesn’t even mention arbitration except to (1) exempt arbitrations with registered broker-dealers under the Securities Exchange Act of 1934; and (2) state that the statute does not invalidate existing agreements to arbitrate that are enforceable under the FAA.  Still, their intent to do away with workplace arbitration was clear. While Federal law states that courts must place arbitration agreements on equal footing with other types of contracts, the proposed state law says that asking someone to sign such an agreement is a misdemeanor.

The Supremacy Clause of the US Constitution says that “the Laws of the United States.. shall be the supreme Law of the Land….” This gives the federal government the power to preempt state regulation of certain areas. The employer groups that challenged AB 51 argued that the statute conflicted with the federal government’s declaration that states cannot put burdens on arbitration agreements that aren’t placed on other types of contracts. The state of California argued (unsuccessfully) that the bill does not regulate arbitration agreements, it instead regulates employers efforts to have workers sign them. Judge Mueller was not swayed by this sophistry. Nor was she swayed by the FAA exclusion mentioned above. On this issue, the state argued that, even if the employer and managers faced civil and criminal penalties, the agreement remained enforceable. It doesn’t require much analysis to see that such a provision does not put arbitration agreements on an equal plane with other types of contracts.

If arbitration is outlawed, only outlaws will have arbitration.

So the state remains banned from seeking to enforce AB 51. The litigation will proceed in the US District Court and will undoubtedly be appealed, whatever the outcome. So this is not the last word. As things stand now, however, employers in California remain free to enter into arbitration agreements with their employees.

Here is the latest in a series of blogs about AB 51, the California bill that threatened mandatory arbitration.  Thankfully, the District Court granted the preliminary injunction in full (not just temporarily), and stopped AB 51 from being enforced.  That means that as long as the arbitration agreement is governed by the FAA (Federal Arbitration Act), it can still be mandatory.  The Court promised a more detailed ruling with its analysis, which we will post when available.

Bottomline, California employers can still have mandatory arbitration agreements, or arbitration agreements with an opt-out provision.  AB 51 is not enforceable.  This case may be headed to the 9th Circuit and eventually the US Supreme Court, but until then, mandatory arbitration is lawful (as long as not unconscionable per existing California law).

It’s hard work keeping up with all nine of California’s state and municipal Paid Sick Leave Laws. But Tyreen Torner has done more than kept up. She’s compiled all of their various requirements in this handy chart. Maybe you prefer looking up the requirements yourself, which is fine. We’re not here to judge. However, if you’re looking for an easy tool to determine whether the various requirements apply, we’ve got you covered.

AB 51, which restricts workplace arbitration, was scheduled to take effect on January 1, 2020. On December 30, 2019, US District Judge Kimberly Mueller granted a temporary restraining order to prevent the legislation from taking effect. She did so in response to a lawsuit by the California Chamber of Commerce and other employer groups arguing that the legislation was unconstitutional. At a hearing on January 10, 2020, Judge Mueller extended the injunction until January 31, 2020 to allow further briefing and argument on the issues.

We’ve been following this issue closely. We wrote about the bill itself here, the pros and cons of workplace arbitration here, the various sides’ economic motives here, the filing of the lawsuit to block the measure here, and the granting of the earlier TRO here.

The state legislature passed similar measures repeatedly, most recently in 2018. But Governor Brown vetoed those prior bills because he deemed them unconstitutional. Now that constitutional battle is playing out in the courts. We’ll continue to provide updates.

California is known for new employment laws that then trickle out to the east coast, the northwest, and eventually nationwide.  Think back to the mandate for sexual harassment prevention training and the roll-out of paid family leave in 2004, and the state-wide statutory sick leave mandate in 2015.

Yet, with new laws also come new court challenges, and several trend-setting California laws are totally or partially on hold pending further court proceedings.  Here are some notable examples:

Prohibition on Mandatory Arbitration (AB51)

As reported here, enforcement of AB51 has been blocked by a Temporary Restraining Order (now extended), with another hearing set for January 31st.  Employers hiring before month-end must decide whether to modify current arbitration agreements to make them voluntary, or to wait and see what happens on the 31st and thereafter (and risk that current arbitration agreements that include opt-out provisions or are mandatory do not meet AB51’s standard if upheld).

Assault on Independent Contractor Agreements (AB5)

As reported here, there are at least three current challenges to AB5 by specific industries.  First, independent owner operators won in a state case which held that AB5 should not render them employees, given federal laws governing interstate commerce; that ruling will be appealed.  And other truck drivers are fighting for a Temporary Restraining Order in federal court.  Second, freelance writers, editors, still photographers, and visual journalists filed a lawsuit to address the limited scope exemption in AB5 (35 submissions per client per year) arguing it is arbitrary and unconstitutional (the TRO in that case was denied, and the hearing on the injunction is set for March).  And third, on-demand companies have also filed a lawsuit arguing that the law is poorly drafted, has too many exemptions, and does not accomplish the intended goal of protecting workers (including the two individual named plaintiffs that chose to work as independent service providers and don’t want to be employees).

Challenge to Law Mandating Women on California Boards of Directors (SB 826)

In September 2018, the California Legislature passed SB 826 which set forth requirements for California based public companies to have a least one female director on their Board by the end of 2019 or face a fine of $100,000.  Requirements increase by the end of 2021 based on Board size.  A male shareholder of a Delaware corporation headquartered in California with an all-male Board filed a lawsuit challenging the “quota law” as unconstitutional.

Bold laws invite court challenges, and time will tell how it all shakes out once the lawsuits work their way through the system.  In the meantime, employers must balance the risks of non-compliance with the possible rewards of litigation victories invalidating all or parts of these laws.  Stay tuned to our fabulous blog to find out what happens next.

We’ve noted before that AB 51 – the California legislature’s latest attempt to attack workplace arbitration – has significant legal flaws. On December 30, 2019, US District Judge Kimberly Mueller granted a temporary restraining order to prevent the legislation from taking effect on January 1, 2020. Judge Mueller ruled that the employer groups bringing the litigation have shown a likelihood of irreparable injury if relief is not granted and that a restraining order is in the public interest. Specifically, they showed that there are serious questions as to whether the law is enforceable and that allowing it to take effect will be unduly disruptive. In addition, the court ruled that the harm to the state of restraining the statute from taking effect until these issues can be more fully addressed is minimal.

A further hearing is scheduled for January 10, 2020.  You can read the order here.

What does this mean for employers? There are obviously pros and cons of mandatory workplace arbitration programs (as we’ve discussed). But if you have such a program, now is not the time to scrap it. 

For an update as of January 13, 2020, read this.

Wondering what to get the little ones for the holidays? How about an up-to-date guide to California’s unique employment laws. Imagine the looks on the little ones’ faces when they see that you’ve gotten a concise, plain-language summary of California’s unique requirements for determining independent contractor status, meal and rest periods, the Fair Pay Act, paychecks and wage statements, the various leaves of absence, and so much more.

Is this something kids ask for? Not usually. But when they see their playmates embroiled in costly litigation because they didn’t know what California requires for timekeeping records, they’ll be glad that you were looking out for them. Get your copy here.

Happy Holidays!

The Bar Association of San Francisco is presenting a seminar: 2019 Disability Employment Law Updates. It will take place on January 16, 2020, from noon to 1:15, at the BASF Conference Center, 301 Battery St., 3rd Floor, San Francisco, CA 94111.

Ben Bien-Kahn of Rosen Bien Galvan & Grunfeld LLP will present the plaintiff’s perspective and I’ll present the defense perspective. The program is approved for 1 hour of of MCLE and is sponsored by the Equality Committee on Disability Rights of the Bar Association of San Francisco.

You can register to attend here or print a flyer here. I hope to see you there!