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With the passage of AB 51, which we discussed in yesterday’s post, it’s understandable for employers and HR professionals to be asking if mandatory workplace arbitration still makes sense. After all, according to the new bill set to take effect on January 1, 2020, requiring an employee to sign a pre-dispute arbitration agreement or implementing an arbitration program potentially exposes employers and HR professionals to misdemeanor liability. So is it time to abandon mandatory employment arbitration? Not in my opinion, but let’s look at the pros and cons:

The Pros

  1. There are no runaway, emotion-fueled jury verdicts. Arbitration awards can be high, but they tend to be more closely rooted in reality.
  2. The procedures (including discovery) are usually more streamlined than cases in court.
  3. Although plaintiffs can still publicize whatever they want, arbitration hearings are generally more private than court trials.
  4. The cases 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.
  5. Cases usually resolve more quickly in arbitration than in court.
  6. The attorneys’ fees are usually lower.
  7. If you win, the other side’s opportunity to appeal is very limited.
  8. 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.

The Cons

  1. It’s easier for unrepresented parties to bring weak claims.
  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.
  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 sexual harassers. However, any remedy that an employee can recover in court against a harasser is available to the same extent in arbitration.
  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. AB 51, set to take effect on January 1, 2020, prohibits the agreements and makes attempts to enforce them unlawful — even criminal (a misdemeanor).

So what are employers to do?

In AT&T Mobility LLC v. Concepcion and other cases, the U.S. Supreme Court has clearly stated that the Federal Arbitration Act preempts state laws that “stand[] as an obstacle to the accomplishment and execution of the full purpose and objectives of [the FAA].” That’s why Governor Newsom’s predecessor, Jerry Brown, kept vetoing bills like AB 51. That’s why AB 51 doesn’t ever use the word “arbitration” other than noting situations in which arbitration is allowed. It attempts to dance around that by talking about waiver of certain rights, forums, or procedures. Still, the intent is apparent and there will undoubtedly be legal challenges to this bill, too. So now is not the time to panic. In fact, if you’re an employer who doesn’t have arbitration agreements with your workers, now may even be the time to implement one, since the bills says that it will not invalidate existing written arbitration agreements that are otherwise enforceable under the FAA.

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.

It’s that time of year again. Time for holiday parties, ugly sweaters, and summaries of legal developments.

The #MeToo movement has resulted in a slew of new bills addressing sexual harassment in the workplace. They include:

  • Assembly Bill (AB) 3109 prohibits language in contracts or settlement agreements that bars anyone from testifying in administrative, legislative or judicial proceedings concerning alleged criminal conduct or sexual harassment. I think that those provisions would have been void under prior law.
  • Senate Bill (SB) 820 prohibits non-disclosure provisions in settlement agreements related to civil or administrative complaints of sexual assault, sexual harassment, and workplace harassment or discrimination based on sex. The bill expressly authorizes provisions that (i) preclude the disclosure of the amount paid in settlement and (ii) protect the claimant’s identity and any fact that could reveal the identity, so long as the claimant has requested anonymity and the opposing party is not a government agency or public official. Settlement agreements signed after January 1, 2019 should be reviewed by counsel to ensure compliance with the new restrictions.
  • SB 1300 significantly expands liability under the Fair Employment and Housing Act.  The law lowers the burden of proof to establish harassment and provides stricter guidance on what constitutes “severe or pervasive” conduct that rises to the level of unlawful harassment (e.g. rejecting the “stray remark” doctrine that previously required more than one offensive remark to succeed on a claim).  It expands FEHA protection to any harassment by contractors, rather than just sex harassment.  It bars a prevailing defendant from being awarded attorney’s fees and costs unless the court finds the action was frivolous, unreasonable, or groundless. This bill also prohibits release of claims under FEHA in exchange for a raise or a bonus or as a condition of employment or continued employment, but presumably not in separation agreements.  These changes take effect at the start of the new year and we will monitor interpretations or guidance of these new and expansive provisions.
  • SB 1343 expands the requirements relating to sexual harassment training. Current law requires all employers with 50 or more employees to provide two hours of sexual harassment prevention training only to supervisors. The new law now mandates training for all employers with five or more employees and becomes effective in 2020.
  • The FEHA already protects employees and applicants from harassment in the employment relationship. SB 224 expands that reach to individuals who may not be employers, but hold themselves “out as being able to help the plaintiff establish a business, service, or professional relationship with the defendant or a 3rd party.” This would potentially include doctors, lawyers, investors, landlords, elected officials, lobbyists, directors, and producers.
  • Defamation laws make certain communications privileged. In other words they cannot support a slander or libel claim unless they’re made with malice. AB 2770 says that those privileged communications include complaints of sexual harassment by an employee to an employer that are made without malice and are based on credible evidence. This bill would also protect employers who (again, without malice) answer questions about whether they would rehire an employee and whether that decision is based on a determination that the former employee engaged in sexual harassment.

Other bills that address sex, gender, and pregnancy discrimination include:

  • AB 1976 deals with lactation accommodation. Employers were already required to provide a reasonable amount of break time to accommodate an employee desiring to express breast milk for her baby and make reasonable efforts to provide a private place for the employee to do so, in close proximity to the employee’s work area, other than a toilet stall. AB 1976 says its not enough that the location is not a toilet stall. Now it can’t be in a bathroom.
  • AB 2282 clears up lingering issues from last year’s ban on salary history inquiries in the interview process. Our own Nancy Yaffe explains it all in this post.
  • While not strictly employment-related, SB 826 requires public companies based in California to have at least one woman on their board of directors by the end of next year. The requirement rises to two female board members by 2021 if the company has five directors, or to three if the company has six or more directors.

There were even some new employment related bills that had nothing whatsoever to do with sex harassment or discrimination.

  • SB 970 requires 20 minutes of classroom or other interactive training regarding human trafficking awareness to hotel and motel employees whom the law deems “likely to interact or come into contact with victims of human trafficking.” This includes any “employee who has reoccurring interactions with the public, including, but not limited to, an employee who works in a reception area, performs housekeeping duties, helps customers in moving their possessions, or drives customers.”
  • AB 2610 creates an exception to the rule that meal periods must begin before the end of the fifth (or in certain conditions sixth) hour for certain drivers transporting nutrients and byproducts from a licensed commercial feed manufacturer to a customer located in a remote rural location.
  • In November California voters approved Proposition 11, which was a reaction to the California Supreme Court’s 2016 decision in Augustus v. ABM Security Services, Inc. As we explained at the time, the decision announced that employees were not “relieved of all duties” for meal and rest breaks if they were required to carry a communications device. Under Proposition 11, the Augustus decision won’t apply to emergency ambulance workers in the private sector. Toni Vranjes wrote an article for the Society of Human Resource Management about Prop 11 in which she interviewed me and other employment lawyers.

What lies ahead? Last April’s California Supreme Court decision in Dynamex Operations West Inc. v. Superior Court threw employers for a loop by announcing a new test for determining independent contractor status. Competing bills seek either to roll back the decision (AB 71) or codify it (AB 5). This is an issue where many workers who appreciate the flexibility of their freelance status have sided with employers in seeking to return to the earlier test.

What else lies ahead? More change, more surprises, more unpredictability. That’s what makes California employment law both aggravating and fascinating.

We’ve written about many of the new employment laws that take effect in California in 2014. But as the year winds down, here’s a handy-dandy list of the most significant ones (with links to our earlier entries).

Expanding paid family leave rights – Like State Disability Insurance, Paid Family Leave is paid for with deductions from employees’ paychecks. When enacted, the law provided up to six weeks of wage replacement benefits to workers who took time off to care for a seriously ill child, spouse, parent, or domestic partner, or to bond with a newborn or a child recently placed through adoption or foster care. Now those rights will extend to workers who need time to care for siblings, grandparents, grandchildren, and parents-in-law. And while we’re on the topic, San Francisco employers need to also pay attention to San Francisco’s new Family Friendly Workplace Ordinance.

Increasing the state minimum wage – Currently $8 per hour, it goes up to $9 on July 1, 2014 and $10 on January 1, 2016. This affects not only nonexempt workers, but also those working under the administrative, professional, and executive exemptions in California (who must earn a salary equivalent to at least two times the state minimum wage for full-time employment to qaulify for the exemption).

Expanded definition of sexual harassment – This new law states that sexual harassment doesn’t have to be motivated by sexual desire. No case or statute said otherwise, but the legislature saw fit to unanimously pass a law saying what sexual harassment isn’t. This will only cause confusion for courts and juries trying to determine what sexual harassment is.

New protections for crime victims – SB 400 takes existing laws that prohibit discrimination against victims of domestic violence or sexual assault and expands them to include stalking victims. It also requires employers to reasonably accommodate (which may include taking safety measures) victims of domestic violence, sexual assault, or stalking. In addition, SB 288 prohibits discrimination against victims of specified felonies (including child abuse, domestic violence, physical abuse of the elderly or a dependent adults, sexual assault, and solicitation for murder) and requires that they be given time off to appear in court.

New protections for immigrants – Thinking about reporting an employee who complained about Labor Code violations to Immigration and Customs Enforcement? Bad idea! Under AB 263, that’s an “unfair immigration-related practices.” Well what if you just threaten to report him? Another bad idea! (Seriously, where do you come up with these?) Employers who do that can lose their business licenses (pursuant to SB 666) and be charged with criminal extortion (pursuant to AB 524)

AB 556 makes “military and veteran status” a protected category under the Fair Employment and Housing Act – For those keeping score (or responsible for updating personnel policies), they join race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, and sexual orientation.

While we wait to learn which employment laws are being taken off the books to make room for these new ones (as if), here are steps employers can take to better protect themselves:

  • Make sure personnel policies and handbooks are up to date (including the lists of categories protected from discrimination);
  • Train managers to understand the various types of leave available to California employees (or at least to refer inquiries to someone knowledgeable);
  • Regarding the expanding definition of sexual harassment:
    • Ensure that personnel policies prohibit not just harassment, but also vulgar language, sexual innuendo, sexual propositions, threats, and bullying.
    • Be vigilant in enforcing those policies.
    • Respond to complaints of bullying, crude behavior, and mistreatment that aren’t necessarily “because of sex” as you would to a sexual harassment complaint. This means you need to conduct (or have someone qualified conduct) a prompt, fair, and thorough investigation and, where necessary, take steps reasonably calculated to stop the behavior.
  • Most importantly, continue following our widely praised blog for further updates on California employment law!

New Year 2014 is coming