Nostradamus, Minimum Wage, and Paid Sick Leave

Thumbs upAllow us to pat ourselves on the back for a moment.  Prognosticating from 2013 into the future, we accurately predicted that in 2014 the Seattle Seahawks would win the Super Bowl and that the public would continue to strongly support minimum wage increases and paid sick leave laws.  (Please politely ignore our Portland Trailblazers NBA championship prediction.)

This year voters in five states overwhelmingly supported an increased minimum wage, while voters in Massachusetts and three New Jersey and California cities adopted paid sick leave.  These states and cities join a growing trend of support for “living wages” and paid sick leave laws.  Earlier this year, for instance, Seattle approved a minimum wage of $15 per hour, while Portland implemented its paid sick leave law and California became the second of now three states to give its employees paid sick leave on a statewide basis (see our posts on Portland’s law here, and California’s law).

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EEOC’s Tough Stance on Employee Separation Agreements

pharmacistEmployers like separation agreements.  Separation agreements, of course, are contracts that employees sign when their employment is terminated that allows them to be paid severance and in exchange they usually give up the right to sue their employer.  Separation agreements provide finality to employment terminations by offering employers protection from claims and potential claims.  The agreements many employers use are often standardized and have served them well for years.  But now might be the time to take another look at those documents, lest the Equal Employment Opportunity Commission (“EEOC”) looks first.

Recently, the EEOC has aggressively asserted its (re)interpretation of the law regarding the enforceability of separation (severance) agreements, suing several companies for using what it perceived to be overly broad agreements.  See, EEOC v. CVS Pharmacy, Inc. no. 1:14-cv-00863 (N.D. Ill. 2014); see also, EEOC v. CollegeAmerica Denver, Inc., no. 14-cv-01232-LTB (E.D. Co. 2014).  The EEOC doesn’t like separation agreements that do not make it sufficiently clear (in the EEOC’s opinion) that employees do not waive the right to file charges with the EEOC or participate in agency investigations, even though the employee can waive claims for damages under the statutes the EEOC enforces like Title VII or the Americans with Disabilities Act (“ADA”).  In the CVS Pharmacy and CollegeAmerica cases, the EEOC alleged the employers’ separation agreement forms constituted a “pattern or practice” of denying employees their statutory rights.  (“Patten or practice” is significant because such cases can carry much higher penalties than a run-of-the-mill lawsuit; they can also inspire class-action lawyers to start snooping around.)

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AB 1897: California’s New Labor Contracting and Client Liability Law

sledgehammerCalifornia Governor Jerry Brown recently signed AB 1897 thereby creating new liability for businesses that engage in labor contracting.  Current California law prohibits employers from entering into labor or services contracts with a construction, farm labor, garment, janitorial, security guard, or warehouse contractor, if the employer knows or should know that the agreement does not include sufficient funds for the contractor to comply with laws or regulations governing the labor or services to be provided.  AB 1897, which goes into effect January 1, 2015, greatly expands this law by requiring all “client employers” to share with “labor contractors” all civil legal responsibility and civil liability for all workers supplied by that labor contractor for the payment of wages and the failure to secure valid workers’ compensation coverage.

AB 1897 defines “client employers” as any business entity “that obtains or is provided workers to perform labor within its usual course of business from a labor contractor” and “labor contractors” as any individual or entity “that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business.”  While there are limited exceptions, the practical effect of these broadly defined terms is to impose joint liability on employers for the employment violations of their subcontractors and staffing agencies. All is not lost, however.  The new law does not prohibit employers from agreeing to any otherwise lawful remedies against labor contractors for indemnification from liability created by acts of the labor contractor.  Second, the law only applies to employers who are provided with workers to perform labor “within the client employer’s usual course of business.”  As such, independent contractors are excepted so long as a bona fide independent contractor relationship exists.

This new law confirms that California businesses must continue to do everything in their power to ensure that their subcontractors and staffing agencies are complying with all aspects of California’s wage and hour laws.  In addition, employers must ensure that any contracts with such parties contain valid indemnification provisions.  It is only by taking these and other steps that employers can protect their businesses from any loss or harm (including attorneys’ fees) arising from claims by the subcontractor’s or staffing agencies’ employees.

What Does Alaska’s and Oregon’s Legalization of Marijuana Change for Employers? Answer: Probably Not Much.

In this week’s mid-term election on November 4, Oregon, Alaska, and the District of Columbia became the latest jurisdictions to pass referendums decriminalizing the recreational possession and use of small amounts of marijuana.  They join Colorado and Washington, which took this step in 2012.  Oregon’s law becomes effective in July 2015; Alaska’s probably in February 2015.

Each of these laws is slightly different (read the full text here of the measures in Oregon, Alaska, and D.C.).  But employers in all these jursidcitions may be wondering about the same question:  does this affect my company’s anti-drug policy or drug testing program and if so, how?

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NLRB Attempts to Make an End Run Around Courts Invalidating its Rulings on Arbitration Agreements

FootballOn October 28, 2014, the National Labor Relations Board (“NLRB”) issued its decision in Murphy Oil USA Inc., once again attempting to prohibit employers from requiring employees to enter into agreements to arbitrate employment disputes if those agreements preclude collective or class action litigation. As we have blogged about in the past, this new decision runs contrary to an overwhelming majority of federal district and appellate court decisions rejecting and criticizing the Obama NLRB’s previous attempt to so extend the law.  A copy of the Murphy Oil USA decision can be found here.

In Murphy Oil, the NLRB split 3-2 along party lines, with the majority finding that gas station chain Murphy Oil’s arbitration agreements were unlawful.  In so doing, the NLRB reaffirmed its controversial January 2012 DR Horton ruling, where the Board ruled that such agreements conflict with employees’ rights to engage in concerted activity under the National Labor Relations Act.  The Fifth Circuit Court of Appeals refused the enforce the Board’s order, and the NLRB declined to seek review from the U.S. Supreme Court.  In what some might say is refusing to take “no” for an answer, the NLRB is trying to resurrect its DR Horton decision.

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Washington Supreme Court Finds Employer’s Discretionary Bonus Not Unlawful “Rebate” Under Wage Rebate Act (“WRA”)

In a 5-4 decision, the Washington Supreme Court has ruled in an employer’s favor and clarified what are, and are not, statutory “wages” and unlawful wage “rebates” under Washington State’s Wage Rebate Act (“WRA”), RCW 49.52 et seq.  The case is LaCoursiere v. CamWest Development, No. 88298-3 (Wash. Oct. 23, 2014) (slip op.).  Camwest Development (“CamWest”) was represented by Stoel Rives attorneys Jim Shore and Karin Jones.

CamWest, a real estate development company, created an optional bonus program via individual written contracts with its participating managers. The bonus program was intended to provide the potential for larger manager bonuses in profitable years, but it also carried a downside risk of smaller, or no, bonuses in leaner years.  Participating managers’ contracts made expressly clear that the decision whether or not to award an annual bonus, and the amount of any bonus, was in CamWest’s discretion.  Managers did not have to participate in this higher reward/higher risk bonus program and could instead choose to receive a safer, set bonus.  Managers who chose to participate in the optional bonus program were required by its terms to contribute a percentage of each annual bonus into a capital account in a separately formed managers LLC.  The LLC would in turn loan money to CamWest to be invested in real estate projects that CamWest would develop.  The hope and intention at the time was that this arrangement would yield higher profit and bonuses for participating managers. Manager contributions to the LLC vested at 20% per year.

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Seven Steps for Employers to Address the Ebola Threat (Step 1: Don’t Panic!)

This might be too much.  But be prepared.

This might be too much. But be prepared.

The recent outbreak of the Ebola virus in West Africa, with the few isolated cases occurring in the United States, is spurring employers to review their emergency response plans for pandemic preparedness.  In seven steps, this writing sets forth best practices for pandemic preparedness, considerations regarding travel during a pandemic, and addressing employees’ immediate concerns without running afoul of relevant employment laws.

1.        Don’t Panic and Stay Informed

With any emergent threat, accurate and reliable information is critical; with a pandemic threat, not having accurate and reliable information causes panic.  Note that as of this writing, the current Ebola outbreak has not been declared a pandemic (meaning, a global epidemic), but employers should monitor communications from the Centers for Disease Control and Prevention (CDC) for up-to-date information.

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“Freaky Fast” Oppression? Jimmy John’s Should Reconsider its Approach to Blanket Noncompete Agreements

Most competent employment lawyers with experience pursuing and/or rebuffing enforcement of noncompetition agreements know that enforcement against low level workers is highly unlikely.  If recent news reports are true, Jimmy John’s apparently never got that memo.

According to reports in The New York Times, The Oregonian and the Huffington Post, the restaurant franchise is requiring all workers, including sandwich makers, to sign broad noncompetition agreements that restrict their employment opportunities for two years after leaving their cushy, highly technical jobs at Jimmy John’s.

Let’s start with the understanding that courts don’t like noncompetition restrictions, which limit a worker’s ability to pursue his career as he sees fit.  Courts use a variety of tools to limit the enforcement of those clauses.  Although courts use different terms to describe it, almost every decision analyzing enforcement of a noncompetition agreement talks about whether the former employer has a “protectible interest.”  In layman terms that means, is there something legitimate that the former employer actually needs to protect by restricting the post-termination employment opportunities of its former employees?  Customer relationships, knowledge of the company’s confidential or trade secret information, or specialized training provided by the former employer are often found to be sufficient “protectible interests” to justify enforcement of a contract clause which limits the worker’s future employment opportunities.  If there is no “protectible interest,” a court won’t enforce the agreement.

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Video Interview: Discussing California’s Paid Sick Leave with LXBN TV

My colleague Bryan Hawkins recently discussed California’s new paid sick leave law with Colin O’Keefe of LXBN. You can catch the interview on the clip below. As Bryan noted in his original post, California is the second state in the nation (after Connecticut) to enact a state-wide law requiring most employers to provide paid sick leave to employees, marking the latest development in a growing trend that has seen similar paid sick leave laws enacted in other jurisdictions, mostly at the city level.

California Court of Appeal Rules Employers Must Reimburse Employees For Work Calls on Personal Cell Phones

The California Court of Appeal’s recent decision in Cochran v. Schwan’s Home Service, Inc.  was simple.  When employees must use their personal cell phones for work, California law requires employers to reimburse them, regardless of whether the cell phone plans are for limited or unlimited minutes.  This decision, however, could have a wide ranging impact on California employment law.

The plaintiff in Cochran sought to bring a class action lawsuit against his employer based on his employer’s alleged failure to reimburse him and similarly situated employees for use of their personal cell phones for work-related calls.  The superior court denied plaintiff’s motion for class certification, finding that the claim was not suitable for class treatment because individual issues predominated.  Specifically, the superior court reasoned that the defendant employer’s liability to prospective class members depended on individual factual issues such as whether employees paid for the cell phone plan themselves, whether employees purchased different cell phone plans because of their work cell phone usage, or whether employees suffered any “actionable expenditure or loss,” i.e., loss of cell phone minutes.

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