In Salazar v. McDonald’s Corp., the plaintiff argued that McDonald’s, a franchisor of fast food restaurants, was liable for wage and hour violations as a “joint employer” of its franchisees’ employees.  Last week, a panel of the federal Ninth Circuit Court of Appeals rejected that argument.

The court relied on the California Supreme Court’s 2014 decision in Patterson v. Domino’s Pizza that held that a franchisor can be a joint employer “only if it has retained or assumed a general right of control over factors such as hiring, direction, supervision, discipline, discharge, and relevant day-to-day aspects of the workplace behavior of the franchisee’s employees.” The plaintiffs were unable to show that McDonald’s, at the national level, exercised such “control” over store level employees in California.

This case is a blow to unions and class action activists who have argued to expand the definitions of “employee” so as to facilitate collective bargaining and mass liability.  The case also seems to put to rest, for now, the notion that the California Supreme Court’s 2018 decision in Dynamex, and recent confirming legislation that distinguishes “independent contractors” from employees, can also be used to undermine the “joint employer” analysis established by the Supreme Court in Patterson.

The California Consumer Privacy Act (CCPA) takes effect in 2020, imposing strict new data privacy mandates on many companies headquartered inside — and outside — the state’s borders.  Is your company among them?

Fox Rothschild’s Privacy & Data Security team has developed a free, easy-to-use online tool — CCPA Scope Adviser — that can help you answer this important question while there is still time to create a compliance plan.

Don’t assume you’re outside the scope.  CCPA carries significant penalties for noncompliance and includes a private right of action that poses the threat of consumer lawsuits over data breaches.  Good news, there is a slight reprieve for employers, but this is still an issue to keep on your radar.

Find out if you’re affected by using Fox’s CCPA Scoping Tool.

In a departure from decisions in recent years, the California high court has finally imposed some limits on the otherwise expansive reach of the Private Attorneys General Act, Labor Code § 2698, et seq. (“PAGA”). The legislation from 2002 allows one “aggrieved” employee to bring a representative action on behalf of all employees to collect penalties for certain Labor Code violations.

The Supreme Court has held: that a PAGA actions does not requires class certification (Arias, 2009); that a PAGA representative action (unlike a class action) cannot be waived in an arbitration agreement (Iskanian, 2012); that the PAGA plaintiff need only be “aggrieved” for one of the alleged violations (Huff, 2018); and that the plaintiff is entitled to contact information for all of the alleged aggrieved employees early in the case (Williams, 2017).

The issue in Zions Bancorp v. Superior Court was whether, in addition to PAGA penalties, the plaintiff could also recover lost wages for the underlying Labor Code violations.  The unanimous Court said “No.”  The plaintiff sought PAGA civil penalties under Section 558 of the Labor Code for failure to pay overtime ($50 for first pay period; $100 for subsequent pay periods).  The plaintiff also sought an additional “amount sufficient to recover underpaid wages” that the Labor Commissioner is authorized to collect under section 558.  The Court held that the “additional amount” sought was not properly considered part of a PAGA recovery, because that amount “is not a civil penalty that a private citizen has authority to collect through the PAGA.”

Takeaway: PAGA still remains a potent weapon for plaintiffs who want to avoid arbitration or to pursue class-type claims without having to meet the procedural requirements of a class action. So while employer victories before the California Supreme Court have been rare in recent years, your celebration should be muted. If you stop paying attention to the numerous Labor Code violations that can give rise to PAGA claims, you’re in for a nasty hangover.

Today, Governor Newsom signed AB 5 into law, drastically altering how millions of Californians are paid and drastically altering the legal analysis involved in distinguishing between “employees” and “independent contractors.” Daniel Kitzes and Brian Casillas have prepared a thoughtful analysis of this new law. You can read it here.

If you have workers in California that you categorize as independent contractors, ignore this development at your own peril.

It looks like the back-and-forth about how much employee information will be covered under the California Consumer Privacy Act, CCPA, is likely resolved, at least for now.  The California legislature recently passed AB 25, which excludes most employment information from the CCPA.  If signed by Governor Newsom, it will specifically exclude information collected by a business for an applicant, employee, owner or contractor, if the information was collected and used solely in the employment context.  The amendment will also exclude emergency contact information and information collected and maintained to administer benefits.

While the exclusion is good news for California employers, it is limited.  The exclusion will only provide California businesses a temporary reprieve — until 2021.  That extra year will give employers more time to comply with the CCPA, and the legislature time to consider whether to extend the exception, or make it permanent.   The Governor has until October 13, 2019 to sign AB 25 into law.

More details about AB 25 and the CCPA can be found in this comprehensive Alert written by Ciera Logan.

As part of my practice focusing on labor & employment counseling, I have developed a passion for helping entrepreneurs set up their businesses and create their corporate cultures.  All while navigating the bevy of employment laws!  Next week, I have the great honor of joining Kourtney KardashianGiuliana Rancic and a roster of awesome leaders to inspire female entrepreneurs at the Create + Cultivate San Francisco conference.   On September 21st,  I’ll be a panelist for the discussion on Diversity and the Importance of Allies in the Workplace.  Fostering diversity in gender, ethnicity, career path, and industry background results in greater productivity and innovation among managers.  We’ll talk about best practices and how to effectuate change both at work and in our communities.  Come join the conversation if you are in San Francisco!

In 2018, California passed numerous pieces of legislation in response to the #MeToo movement that expanded the obligations of employers to provide sexual harassment prevention training.  SB 1343 is one such piece of legislation that went into effect this year and requires that all California employers with five or more employees provide at least two hours of sexual harassment prevention training to all supervisory employees, and at least one hour of sexual harassment prevention training to all nonsupervisory employees.  The new law set January 1, 2020 as the deadline for California employers to meet these new training obligations, with a requirement that employees receive additional training every two years thereafter.

With just a few months until the January 1, 2020 deadline, many of the employers who put off scheduling the necessary training began to feel nervous that they would not be able to meet their new obligations.  If you are one of the employers who waited until the last minute, fear not, we have some good news.documents about workplace harassment in an office.

On August 30, 2019, Governor Gavin Newsom signed SB 778 which extended the deadline for employers to meet most of the new training obligations for another year until January 1, 2021.  The extended deadline means that employers with more than five employees have another year to come into compliance with their obligations to provide training to supervisory and nonsupervisory employees. SB 778 also clarified that a covered employer who already provided training to an employee is not required to provide additional training to the same employee until two years after the prior training.

So employers are in the clear for another year?  Well, not exactly.

Since 2004, California has required employers with 50 or more employees to provide two hours of sexual harassment prevention training to supervisory employees.  The recent enactment of SB 778 has no impact on these previous training requirements for larger employers.  The new legislation also has no impact on new requirements impacting seasonal and temporary employees. As of January 1, 2020, seasonal and temporary employees who are hired to work less than six months must receive sexual harassment training within 30 calendar days of hire or within 100 hours worked, whichever comes first.

Finally, employers need to remember that they are always obligated to take reasonable steps to prevent harassment in the workplace.  In addition to maintaining compliant anti-harassment policies and procedures, one of the key things that employers can do to meet their obligations is to provide regular sexual harassment prevention training.

So while employers may breathe a little easier with some additional time to meet certain training obligations, they should plan ahead and schedule harassment prevention training as soon as possible.  Fox Rothschild has a team of employment attorneys in Southern California and Northern California who provide interactive (and dare I say, enjoyable) training that will help employers meet their obligations under California law.  Contact one of our highly-qualified attorneys to discuss how Fox Rothschild may be able to meet your training needs.

“Unconscionability” is alive and well, as last week the California high Court renewed its 30-year running dog fight with the U.S. Supreme Court over the enforceability of arbitration agreements.  In One Toyota of Oakland v. Kho (“OTO”), the California Court struck down an arbitration agreement as “unconscionable,” and allowed an employee to proceed with administrative proceedings before the Labor Commissioner in a routine wage and hour case.  While purporting to base its decision on a “fact specific” analysis, the opinion will make it very difficult to compel arbitration of any DLSE hearing in a wage and hour case.

In 2000 in Armendariz, the California Supreme Court largely invented a new doctrine of “unconscionability” which, unhinged from traditional contract analysis, potentially allows a trial judge to deny arbitration where she feels the circumstances are just darned unfair.  That potential was on full display in OTO.

The Court in OTO went out of its way to find that the arbitration agreement (a condition of employment) was highly “procedurally unconscionable,” and fraught with “surprise” and “oppression,” and, of course, “lack of negotiation” and “unequal bargaining power.” (So, unless the arbitration agreement has an opt-out provision, that the employer can prove the employee really, really, understood, the risk of “procedural unconscionability” is high.) Having found that the employer engaged in “unconscionable” behavior in drafting and implementing its arbitration agreement, the Supreme Court thus nimbly moved on to find that the agreement was also “substantively unconscionable.”

While Armendariz requires that an arbitration agreement must provide many of the procedural protections of traditional litigation in order to avoid “unconscionability,” those features ironically can now actually create “unconscionability” when the employee seeks to invoke the administrative remedies under the Labor Code.  The “Berman Hearing” is an informal, non-binding trial before a hearing officer to adjudicate wage and hour claims.  It is apparently just darned unfair to deprive an employee of this remedy notwithstanding a duly-executed arbitration agreement that dictates otherwise.

The dissent in OTO points out that the six-justice majority not only appears to have deviated from its own prior precedent, but also, once again, runs afoul of U.S. Supreme Court precedent on the preemptive effect of the Federal Arbitration Act (“FAA”). The U.S. Supreme Court has intervened in the past to remind the California Courts that the FAA preempts such attempts to curtail arbitration.  See e.g. Perry v. Thomas, 482 U.S. 483 (1987); ATT Mobility v. Concepcion, 563 U.S. 333 (2011).

In recent years, the California Court has attempted to carve out special exceptions to the applicability of the FAA for the California Private Attorneys General Act in Iskanian, the California Business and Professions Code in McGill, and now, in OTO, the “Berman Hearing” under the California Labor Code.  The California Court may once again be setting up a constitutional confrontation with the U.S. Supreme Court over the supremacy of Congressional legislation and the enforceability of arbitration agreements.

Humans are not unbiased observers and decision makers. I’m not talking here about prejudice based on protected categories. I’m talking more generally about systemic flaws in how our brains interpret and act upon information. Take for example the Ebbinghaus Illusion. There are two red circles in the image below. While people consistently see the left one as smaller, they’re the same size.

Scientists spend a lot of time studying how and why we consistently misinterpret the world around us. Michael Lewis (in The Undoing Project) and Nobel laureate Daniel Kahneman (in Thinking Fast and Slow) discuss these issues in depth.

Sexual overperception bias provides an example that’s relevant to employment law. It occurs when a person mistakenly perceives that a member of the opposite sex is sexually interested in him or her. Studies (like this one) show that men are far more likely to make this mistake than women. In other words, men are more likely to believe that a woman is interested in them sexually when that is not the case. There’s even a study that suggests that men in positions of power are more likely to make this mistake.

It’s obviously hard to change biases that may be ingrained through evolution. But good luck arguing in court that the alleged harasser you represent is just wired that way. Employers need to educate supervisors that, whether they think someone is interested or not, pursuing workplace romance can be disastrous. They can use harassment prevention training to make this point.

The training doesn’t need to get into detail regarding cognitive biases. It does, however, need to emphasize the tremendous downside of supervisors pursuing relationships with subordinates. The #MeToo movement provides plenty of examples of men who acted inappropriately toward subordinates and suffered the consequences. Instead of trying to undo biases that may have an evolutionary basis, make sure that supervisors understand the financial, emotional, organizational, and reputational costs of making unwelcome advances to their subordinates. I’m not ignoring the costs paid by victims of harassment. I’m saying that for harassment training to be effective, supervisors need to understand that the risks of making unwelcome advances far outweigh any perceived upside.

There is a lot of confusion about how the California Consumer Privacy Act (CCPA) will impact California employers.  The California legislature is considering AB25, which has been interpreted as eliminating CCPA’s requirements for California employers.  But that is too simple of an interpretation because of the requirements of AB25 in its current iteration, as well as existing California labor laws.

Right of Access:

In general, the CCPA regulates the right of California residents to access, delete and opt out of sharing their personal data.  However, California employees already have a right to access some of their private employment data.  Under the California Labor Code, employees have the right to access and receive copies of their pay records and their personnel files upon request.  In fact, these requests are commonplace for California employers.   So that right to access won’t change.

In addition, AB25 sunsets in one year.  As of January 1, 2021, unless another arrangement has been reached, the full legal rights CCPA grants all residents will also be granted to employees.

Right of Information:

In its current iteration, AB25 reinstates the requirement to provide employees the privacy information that California businesses are required to provide all residents.  Once the final version of the CCPA passes, chances are that in addition to an online privacy notice on their websites, California employers will need to provide  applicants and employees some sort of privacy notice.  This will likely include information about what personal information is collected about them, the purpose, with whom it is shared, and what the employee/applicant’s rights are about it.

What is Data In the Scope of the Employment Relationship?

As drafted, AB25 only exempts personal information collected from an individual by a business in the course of the individual acting as a job applicant to, or an employee or contractor of that business.  Depending on how it is interpreted by the California Attorney General, certain personal information collected about (not from) employees, and certain information collected from the employees but not necessarily in connection with the employment relationship, would remain within CCPA’s scope.  This could include extra-curricular employee data, such as biometric data, or health information through a 3rd party service or app which is provided as a perk and not required for the employment relationship.

In this current climate, it is important to be careful with any information that seems “big brother-esque” or where, if discovered, an employee might ask “why would my employer have this information about me?

If you are reading blog posts and think the CCPA is not your issue as a California employer, think again.  Privacy issues are not going away, they are only expanding….

Many thanks to my partner Odia Kagan for explaining the CCPA to me, so I could explain it to you!