In meaningful numbers, employers across the U.S. who are rebuilding their workforces are being sued by employees not recalled from COVID furloughs and applicants not hired. Last week, I posted an Alert describing the risks to employers nationally of such litigation and giving recommendations on hiring up defensively. California employers, in particular, may be at the greatest risk of such litigation and their planning accordingly is vital.

Local Recall Obligations

First, several California cities have enacted ordinances giving union-style rights to non-union employees who were furloughed or laid off due to the pandemic, that is, rights to be recalled with legally-mandated preference over other candidates. Los Angeles, Long Beach, San Francisco and Oakland, for example, have enacted such measures. Other jurisdictions may follow. The ordinances place involved burdens on employers. They are also traps for companies who are not thoroughly familiar with the requirements, including companies based outside California but with operations in such cities. Our firm’s Alert on the San Francisco ordinance, for example, may be found here.

AB 3216 on Governor Newsom’s Desk

Such obligations may become the law statewide. Late in the night on September 1, the California Legislature passed a bill that would impose such recall requirements on employers throughout the state, obligations, in fact, that will be more intricate and burdensome than those cities have in place now. If signed by Governor Newsom, Assembly Bill 3216 will enact Labor Code section 2810.8, a five-page long system of recall and other rights for employees of certain hotels, private clubs, event centers, airport operations and companies providing janitorial, maintenance or security services to office, retail or other commercial buildings.

The Governor has until September 30 to sign or veto AB 3216.

Unparalleled Legal Ammo for California Employees and Applicants

California employees not included in recalls from furloughs and applicants who are not hired have at their disposal what is almost certainly the nation’s most potent arsenal of grounds for claims that they were victims of discrimination or retaliation, namely, the California Fair Employment and Housing Act and the California Labor Code. California’s legal terrain makes it necessary for employers with operations here to plan their staffing up with at least the same care they invest in designing defensible reductions in force.

Hire Up Defensively

Rebuilding workforces from a thoughtful, defensive perspective is important everywhere, but perhaps most critical in California. Please take into account the risks and preventive considerations discussed in my Alert.

On Monday night, the California legislature passed Assembly Bill 2257 (AB2257), a clean-up bill to Assembly Bill 5 (AB5).  Under AB 2257, musicians, fine artists, freelance writers, photographers, and translators would be among those getting exemptions from AB5 to continue working as independent contractors, rather than as employees.  The bill is expected to be signed into law by Governor Newsom later this month.   AB 2257 would have significant implications for specific industries, including:

  • Eliminate submission cap for freelance writers and photographers (current rules require freelancers who contribute more than 35 submissions to be classified as an employee);
  • Exempt underwriting inspections and other services for the insurance industry from the ABC test;
  • Exempt certain occupations in connection with creating, marketing, promoting, or distributing sound recordings or musical compositions from the ABC test;
  • Create exceptions for licensed landscape architects, specialized performers teaching master classes, registered professional foresters, real estate appraisers and home inspectors, and feedback aggregators.

Notably, AB 2257 does not provide exemptions for workers in the rideshare industry such as Lyft and Uber.  You can find an update on the latest in the rideshare industry here.

As we blogged in December and April, Governor Gavin Newsom signed AB5 into law in September 2019.  The new law expanded the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court.  Specifically, it applied Dynamex’s “ABC Test” to both California Wage Orders and the California Labor Code, creating the presumption that workers in California are employees, not independent contractors – unless an employer can satisfy a three pronged test known as the ABC test.

We will provide you with updates on AB5 as the landscape continues to evolve in the coming weeks and months.

Several weeks have gone by since Governor Newsom paused California’s reopening plan due to a surge in COVID-19 cases, leaving California businesses with little guidance as to when they could resume reopening.  On August 28, 2020, the state finally released The Blueprint for a Safer Economy.  This new blueprint for reopening is a four-tier, color-coded system that lays out the restrictions for each activity in each county, with Tier 1 being the most restrictive.

  • Tier 1 – Purple: Widespread
  • Tier 2 – Red: Substantial
  • Tier 3 – Orange: Moderate
  • Tier 4 – Yellow: Minimal

While most of the state’s counties are in currently in Tier 1 (hence the prevalence of purple in the map), California residents and businesses owners will receive weekly updates related to their county’s progress and whether the COVID-related metrics qualify the county to move up a tier where more businesses and activities are allowed to resume and less restrictions apply.  The Blueprint went into effect on August 31, 2020 and the first update will be provided on September 8, 2020.

While we continue to grapple with the uncertainty that is COVID-19, this new Blueprint at least provides a framework to plan ahead for both businesses and individuals.  Check out this Alert written by our own Liku Madoshi for more information on California’s new blueprint, and how it might impact you.

As someone who represents employers, I’ve long been a proponent of arbitration as a way to limit exposure to employment claims. I have colleagues who disagree and I recognize that it’s a complicated issue. So starting about five years ago, I’ve been laying out what I saw as the pros and cons of mandatory workplace arbitration. I did so to enable employers to make informed decisions on their own as to what course to take.

Like so much of employment law (and life in general), the only constant is change. Since I wrote on this topic last October, a federal district court ruled that AB 51 (seeking to ban mandatory workplace arbitration) was unenforceable, a state appellate court issued a decision restricting third-party discovery (Aixtron, Inc. v. Veeco Instruments Inc.), and COVID-19 has drastically decreased courts’ ability to get civil cases to trial. So given the current situation, here’s what I see as the pros and cons.

The Pros

  1. You avoid runaway, emotion-fueled jury verdicts. Any skilled plaintiffs’ trial lawyer knows how to appeal to jurors’ emotions. Those techniques don’t work as well on an experienced arbitrator. For that reason, while arbitration awards can be substantial, they tend to be more closely rooted in reality.
  2. The procedures (including discovery) are usually more streamlined than cases in court. Usually, that’s a benefit for the employer, who’s bearing the cost of the proceedings.
  3. The cases tend to settle more cheaply. This is a function of item 1 above. 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 windfall.
  4. Cases usually resolve more quickly in arbitration than in court.
  5. The attorneys’ fees are usually lower.
  6. If you win, the other side’s opportunity to appeal is very limited.
  7. Since the Supreme Court decided Epic Systems Corp. v. Lewis in 2017, it is now clear that you can require employees to waive the right to pursue class actions.
  8. It’s always been a struggle to get employment cases to trial. Every trial lawyer knows the frustration of preparing for trial, getting your witnesses prepared, lugging your files to court, and being told there are no courtrooms available and to come back in a few months. Given court closures due to COVID-19, and the need to give criminal trials priority, that problem is not going away anytime soon. Arbitration hearings, in contrast, usually proceed as scheduled.
  9. To the extent that proceedings take place by remote video, a jury trial will be far more unwieldy than an arbitration hearing. Trying to assess whether jurors are engaged and how they’re reacting by video seems especially daunting.

The Cons

  1. It’s easier for unrepresented parties to bring weak claims in arbitration. Because there are fewer procedural rules, it’s easier for a party to proceed even if they can’t convince a lawyer to take their case.
  2. Forum and arbitrator costs are higher and, in California and many other jurisdictions, the employer bears the vast majority of those costs.
  3. While Epic Systems resolved the issue of class action waivers, the California Supreme Court has said “no” to mandatory arbitration of Private Attorney General Act claims. Eventually, the U.S. Supreme Court may need to address that issue. But it’s not eager to do so, having passed up numerous opportunities.
  4. As our friends at Wage & Hour – Developments and Highlights have pointed out, plaintiffs’ lawyers who previously filed class actions may now start filing multiple individual arbitrations for wage and hour violations, which could subject employers to burdens and expenses that rival class actions.
  5. As part of the #MeToo movement, there have been concerted attempts by some to argue that arbitration agreements protect harassers. However, any remedy that an employee can recover in court in California against a harasser is available to the same extent in arbitration. I’ve also heard  arbitration attacked as a “secretive” process. It’s true that arbitration hearings are generally more private than court trials. But I know of nothing that prevents a claimant in arbitration from publicizing her claims however she wants. Still, there’s no question that the decision to adopt an arbitration program can be characterized as coercive or oppressive by certain groups.
  6. If you lose at arbitration, your opportunity to appeal is very limited.
  7. It can be harder to get cases out on dismissal or summary judgment.
  8. While it hasn’t been my experience, some say that arbitrators tend to “split the baby.”
  9. Based on the Aixtron decision, unless the arbitration agreement specifically allows it, you may not be able to subpoena information from third parties for discovery. I don’t know if that disadvantages one side over another, but it’s worth noting.
  10. Every year, the California Legislature passes a bill aimed at abolishing mandatory workplace arbitration. Governor Brown repeatedly vetoed the bills as unconstitutional. Governor Newsom signed AB 51, but as noted above, a federal court deemed it unlawful. That litigation, and the resulting uncertainty, continues.

So what are employers to do?

The lawyers who represent employees have been fighting to do away with workplace arbitration for years. The battle began well before the #MeToo movement. The reasoning has nothing to do with arbitrators being biased (they are certainly better at applying the law to the facts than juries) or plaintiffs not having an effective way to vindicate their rights (they can bring the same claims for the same remedies).

The issue here is money. Because juries are more likely to be swayed by emotion than arbitrators, a jury is more likely to grant a windfall verdict. As a result, jury verdicts tend to be higher than arbitration awards.  A corollary of that is that cases that are heading to a jury trial (with the greater possibility of an emotion-fueled verdict) tend to settle at a higher dollar amount than cases that are headed to arbitration. Sure there are other arguments for and against arbitration. But it would be naive to underestimate the financial motives behind this battle — on both sides.

I’ve defended hundreds of cases for employers over the years in court and in arbitration. From that experience, I believe that – for most employers – the pros outweigh the cons. Since most cases end up settling and cases subject to arbitration tend to settle more cheaply, I believe arbitration agreements still make sense. Of course, every employer is different in terms of goals, risk tolerance, employee relations, and myriad other factors. So you should discuss what makes sense for your company with qualified employment counsel.

UPDATE: I’ll be speaking on this topic at noon on September 24, 2020 at a virtual meeting of the San Mateo County Bar Association Labor and Employment Section. Register here.

The fate of rideshare companies in California has taken several dramatic twists today following last week’s preliminary injunction enjoining Lyft and Uber from classifying their drivers as independent contractors.

The trial court’s injunction, issued on August 10th, served as a considerable defeat for Lyft and Uber in their attempt to avoid a revamped employee classification test under AB-5 (the California statute codifying the ABC standard into widespread law).  Under the ABC test, employers must satisfy all three of the following prongs to establish independent contractor status for workers: (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.  The ABC test has a significant impact on California employers as there are steep penalties for misclassifying workers as independent contractors, including violations for unpaid wages, missed meal and rest breaks, and overtime.

The stay on the trial court’s injunction was set to expire today, requiring that Lyft and Uber begin compliance on August 21, 2020.  This morning, Lyft sent major shock waves across the “gig” economy when it announced that it would suspend all ride hailing operations across California as a result of the injunction.  Uber also announced that it would take similar drastic measures throughout the state.

However, on Thursday afternoon, the California Court of Appeals issued an order extending the deadline for Lyft and Uber to comply with the trial court’s injunction until Lyft’s and Uber’s appeals on the injunction are adjudicated.  As part of the Court of Appeals’ order extending time, Lyft and Uber’s appeals must be consolidated and both companies are required to submit statements from their chief executive officer confirming that they have developed implementation plans under which, if Proposition 22 on the November 2020 ballot fails to pass, the companies will be prepared to comply with the injunction.  Oral argument on the appeal is scheduled for October 13, 2020, and is set to be a monumental battle on AB-5.

As alluded to in today’s order by the Court of Appeals, Uber and Lyft, along with DoorDash, were successful in getting a proposition on California’s 2020 ballot known as “Proposition 22” that, if approved, would allow these companies to avoid AB-5 and continue to classify their workers as independent contractors.  Proposition 22 also stipulates that the companies provide more benefits to drivers, such as a minimum wage and access to health and workers’ compensation insurance.  It is a proposal for a hybrid status, as was suggested here many years ago.  Suffice it to say, Proposition 22 has massive implications for the future of California’s economy.

Stay tuned for more updates in California’s gig-economy battleground!  And in the meantime, you can still rely on Uber and Lyft to get you where you need to go.

As you may have heard, the federal Department of Labor has issued new Certification of Health Care Provider forms for an employee’s own serious health condition (WH-380-E) and to care for a family member (WH-380-F).

These forms are important to justify an employee’s request for FMLA and provide much more information than a simple doctor’s note.  If you don’t require employees to complete these forms for every FMLA leave, you should.

But can California employers use the federal forms?  The answer is yes, BUT with the following clarifications:

  • In California you are not allowed to obtain the underlying diagnosis, illness, impairment, or physical/mental condition.  This is because of our state’s Constitutional right to privacy.  So, it helps to clarify that the health care providers should not disclose such patient information (or genetic information, which is also protected under California law).
  • The forms only reference FMLA, but California also has the California Family Rights Act (CFRA), so make sure to clarify that any leave granted in California is FMLA/CFRA, and not just FMLA.
  • The forms do not specifically reference California’s Pregnancy Disability Leave laws, so again, make sure to clarify that any overlap in leaves is properly designated.

You can certainly amend the federal forms to address these issues, or clarify them in another document.

Many thanks to Liku Madoshi for her thoughtful evaluation of the federal certification forms with California issues in mind.

Widespread opioid abuse continues, including among working Americans, subjecting employers to the risk of liability under the intricacies of the Americans with Disabilities Act (ADA) and similar state laws. On Wednesday, the U.S. Equal Employment Opportunity Commission (EEOC) weighed in, releasing two new guidance documents, one directed to employees and the other to their healthcare providers. Employers should take heed of both documents.

Prescribed use of opioids remains high in the U.S. In 2018, more than 168,000,000 prescriptions for opioids were written in the U.S. This is equivalent to a national rate of opioid prescriptions of more than 51 prescriptions written per 100 persons, according to the Centers for Disease Control and Prevention.

Prescription drugs such as codeine, morphine, OxyContin, Percodan, Percocet, Vicodin, Lortab, Lorcet, Demerol, and illegal drugs including heroin, are considered to be opioids by the EEOC. Certain drugs prescribed to treat opioid addiction are also considered opioids under the guidance documents.

In its new guidance to employees, the EEOC highlights that employees who are using opioids legally, are or were addicted to opioids or are in treatment for opioid addiction may be entitled to reasonable accommodation under the ADA.

Where, for example, an employee is prescribed an opioid as treatment for a pain condition and the condition qualifies as a disability under the ADA, the employee may be entitled to reasonable accommodation, according to the guidance. An employee may also be entitled to reasonable accommodation, in another example, if an opioid medication interferes with an employee’s “everyday functioning.”

Employees who are addicted to opioids, a condition sometimes referred to as “opioid use disorder” or “OUD,” and employees who need accommodation in order to avoid relapse may be entitled to reasonable accommodation, according to the EEOC.

The EEOC also makes clear in the new guidance to employees that the current illegal use of opioids is not protected by the ADA.

The EEOC guidance directed to healthcare providers sets out basic information regarding employees’ rights to reasonable accommodation. In an aspect that may be of greatest practical value, the guidance explains the categories of information healthcare providers should include in medical certifications they prepare in support of patients’ requests for reasonable accommodation.

The eight-page guidance directed to opioid-affected employees largely advises them as to circumstances in which they may be entitled to reasonable accommodation and how to request accommodation. The guidance, entitled “Use of Codeine, Oxycodone, and Other Opioids: Information for Employees,” may be found here.

The EEOC guidance for healthcare providers is entitled, “How Health Care Providers Can Help Current and Former Patients Who Have Used Opioids Stay Employed, and may be found here.

The guidance documents do not set out new rules. Rather, they are intended to be concise statements of “principles already established” for use by employees and their healthcare providers, the documents state.

Given that the EEOC will be making these guidance documents broadly available to employees and their healthcare providers, the documents merit attention by human resources personnel and others within employer organizations who play a role in accommodation decisions or managing affected employees.

 

What is a “furlough”  when applied to a private business with a non-union workforce in California?  In my view, it is a temporary layoff (or required unpaid leave due to lack of work) with full expectations to return to work.  However, too many California businesses were not clear on what they meant by the term when they “furloughed” workers back in March, and that is causing unnecessary confusion now.

When workers were “furloughed” were they provided an anticipated return to work date?  Did they have a right to reinstatement?  Were they told when/if health benefits would end and they would be offered Cobra?  When/if they would be paid final wages (and accrued vacation/PTO) if not brought back?  Were they given a WARN notice?  Hopefully the answers are yes to these questions, but if not, confusion reigns when trying to figure out their status as businesses open up again, or open with scaled back work-forces, or open and close and reopen depending on local orders.

Hopefully employers have since clarified what they meant by furlough, and either brought workers back, or paid out accrued wages and vacation, and issued formal layoff notices with the proper end of employment paperwork and unemployment information.  If not, I suspect the number of claims by “furloughed” workers, who do not understand their status (and their employers can’t explain it), will continue to rise.

Are you tired of Covid checklists yet?  Well you may be, but California recently issued an Employer Playbook for a Safe Reopening that is actually quite good.

It includes a concise summary of what to do when there is Covid in your workplace, with links to resources with more information.  There is also a helpful chart about when you can allow an employee to return to work depending on hospitalization vs. not, positive test without symptoms vs. positive test with symptoms, etc.   Plus information about what agencies you need to report positive cases to and when.  Much information about the topics most employers are grappling with.

Covid isn’t going away, but at least we have another helpful resource to answer questions about the ins-and-outs of operating a business in this pandemic-infused reality.   Please stay safe!

 

Faced with escalating Coronavirus infections in California, county public health departments across the state are ramping up enforcement of COVID-related restrictions on businesses — conducting investigations, imposing fines and shutting down non-compliant facilities.

Businesses at risk of enforcement action include those not adhering to mask, face shield, physical distancing and hygiene requirements for employees or customers, limits on the maximum number of customers permitted on premises, requirements that employees be allowed to work from home if their jobs may be performed remotely, and requirements barring certain indoor operations such as, currently, dining indoors at restaurants.

In Los Angeles County, the Public Health Officer has investigated more than 24,000 businesses since March 2020 for suspected violations of the County’s “Safer at Home Order” or the State of California’s COVID-19 related public health orders. This equates to investigating nearly 5,000 businesses per month. The businesses investigated so far in Los Angeles County break down as follows: 17,000 restaurants, 3,500 grocery stores, 600 swimming pools and 3,000 businesses of other types. The volume of businesses out of compliance may be illustrated by restaurants. In June, Los Angeles County health inspectors found one third of restaurants to be in violation of physical distancing protocols indoors (including for takeout) and 44% of restaurants violating face mask and shield requirements.

Complaints by employees, customers and others of businesses operating in violation of COVID-19 public health orders are being made to county public health departments in great numbers. As of last week, nearly 18,000 complaints had been made to the Los Angeles County Public Health Department of businesses apparently violating COVID-19 related restrictions.

County health departments are shutting down non-compliant businesses. The Los Angeles County Public Health Department, for example, has closed 26 restaurants, one grocery store, one pool and 67 businesses of other types for violations of the County’s “Safer at Home” Order to date in the Coronavirus pandemic.

As part of a newly-authorized, more aggressive enforcement strategy, the Los Angeles County Public Health Department will in late August begin imposing progressively more serious penalties for violations of the “Safer at Home” Order. For first violations, $100 fines per violation generally will be imposed. For subsequent violations, businesses will suffer fines ranging up to $500 per violation. For multiple violations, cases of particularly egregious and dangerous violations or when businesses fail after being warned to come into compliance, the Department will suspend permits issued to the business for 30 days, regardless of whether the permit is issued by the County Public Health Department or any other County Department. The County Board of Supervisors ordered the stepped-up enforcement strategy this month.

The City and County of San Francisco’s “Stay Safer at Home” Order updated on July 20 gives notice that the San Francisco Department of Public Health may order business “premises vacated and closed” in the event of violations.

Local law enforcement agencies, as well, across the state are warning of more strict enforcement of the public health orders. This month, for example, the San Diego County Sheriff’s Department warned that “deputies will enforce the orders, which do carry the weight of law” and that “any businesses found in violation” of the public health orders will be reported to the County Health Officer for “further investigation and possible action, which could result in the closing of a business not in compliance.”

Los Angeles, San Diego, San Francisco and other counties have broadly publicized that violations of county Coronavirus-related public health orders may constitute criminal violations consisting, in most instances, of misdemeanors carrying sentences of fines and/or imprisonment.

The bottom line is that businesses of all types, but particularly those with high consumer traffic or significant workforces on site, should pay heightened attention to compliance with their particular county public health orders and the State of California’s orders setting out COVID-19 restrictions. If not, be warned: you may be fined or shut down, or suffer damaging media coverage.