Anti-Arbitration Bill Approved by California Legislature

On August 27, 2015, the California Assembly approved AB 465. The bill, which was approved by the California Senate on August 24, would prohibit California employers from requiring most individuals to enter into arbitration agreements as a condition of their employment.

For years, California employees have primarily relied on the doctrine of unconscionability to argue against the enforceability of arbitration agreements. This argument typically requires two things: first, a showing that the agreement is procedurally unconscionable, meaning that there was some unfairness in the procedure or method in which the agreement was presented to the employee, and second, a showing that the agreement was substantively unconscionable, meaning that its terms were overly harsh or one-sided. If signed by Governor Brown, AB 465 would change that analysis.

AB 465 provides that arbitration agreements, and other waivers of legal rights, must be “knowing and voluntary and in writing, and expressly not made as a condition of employment.” This would represent a shift in California law as it would allow employees to invalidate arbitration agreements without a showing of both procedural and substantive unconscionability. In addition to this change, AB 465 makes several other changes, including (1) placing the burden of proving that an arbitration agreement was proper on the employer, (2) making arbitration agreements required as a condition of employment per se invalid, and (3) providing employees who are successful in invalidating these types of agreements the right to recover their attorneys’ fees.

With its passage by the California Assembly, the bill now goes to Governor Brown for his signature. Even if Governor Brown chooses not to sign the measure, employers should make sure that their arbitration agreements are in compliance with the current state of California law. If the bill is signed, however, then employers with operations in California should immediately take steps to ensure that their arbitration agreements comply with the new law or risk an influx in lawsuits brought by both individual and classes of employees.


Northwestern University Football Players Can’t Vote for Union Representation …but it’s not over until it’s over…

Depending on your allegiance, “the Play” was one of either the most memorable or the most infamous moments in the history of college football. It happened in the final seconds of 1982’s annual “Big Game” between the Stanford Cardinal and U.C. Berkeley’s Golden Bears. As the fourth quarter was winding down, the Bears had taken a 19-17 lead over the Cardinal, but Stanford quarterback John Elway would have none of it: he overcame a dire 4th-and-17 and drove the Cardinal into field goal range. The field goal was good, giving Stanford a 20-19 lead with just seconds left in the game. As Stanford prepared to kick off, Cal announcer Joe Starkey observed, presciently, that “only a miracle can save the Bears now!” Continue Reading

California Court Limits Defenses Available to Employers Requesting Employee Background Checks

Background checks can provide California employers with vital information concerning their employees. In order to protect individual privacy rights, however, the California legislature has created two separate laws governing the procedure for such checks: the Investigative Consumer Reporting Agencies Act (“ICRAA”), which generally governs reports concerning “character information,” and the Consumer Credit Reporting Agencies Act (“CCRAA”), which generally governs consumer credit reports. In a 2007 decision, Ortiz v. Lyon Management Group, Inc., the California Court of Appeal determined that the ICRAA was “unconstitutionally vague” if the report in question was arguably governed by both acts. On August 12, 2015, the California Court of Appeal for the Second Appellate District issued its opinion calling that 2007 decision into question.

In Connor v. First Student Inc., the employee alleged that her employer’s background check violated the ICRAA. Based on the Fourth Appellate District’s decision in Ortiz, the lower court dismissed the action after determining that the background report in question was arguably governed by both the ICRAA and the CCRAA. The employee appealed. The Second Appellate District reversed the lower court’s ruling, determining that Ortiz was wrongly decided because there was nothing in either the ICRAA or the CCRAA precluding the application of both acts to reports pertaining to both “character information” and creditworthiness.

With the decision in Connor, California employers must be sure that any background reports they obtain comply with all applicable law, including the ICRAA and the CCRAA as well as the other applicable federal laws and local ordinances. More importantly, and to the extent there was any need, Connor is yet another reminder that California employers must continue to be diligent as they traverse California’s complex legal landscape. Failing to do so risks not only statutory liability but also substantial legal costs.

The Ninth Circuit Joins Its Sister Circuits in Ruling That an Employee Who Threatens Co-Workers with Violence Is Not “Qualified” Under the ADA

The Ninth Circuit released a precedent-setting Americans with Disabilities Act (“ADA”) decision yesterday, and it’s a big win for employers.  The Court held that an employee who makes “serious and credible threats of violence toward his co-workers” is not a “qualified individual with a disability” and therefore cannot state a claim under the ADA or Oregon disability law. Karen O’Connor, Brenda Baumgart and Andrea Thompson from Stoel Rives represented the employer in this case, Mayo v. PCC Structurals, Inc., and a link to the Court’s decision is here.

Plaintiff’s Stress Leads to Death Threats in the Workplace

Plaintiff was a long-term welder at an industrial facility. Despite a 1999 diagnosis of major depressive disorder, he worked without significant issue for decades. In 2010, plaintiff and a few co-workers claimed a supervisor bullied them at work. Shortly after a meeting among plaintiff, a co-worker and the company’s HR director to discuss the supervisor, plaintiff began making threatening comments. He told a co-worker that he “felt like coming down to [the facility] with a shotgun and blowing off” the heads of his supervisor and a different manager. Among other comments, he also told other co-workers that he planned to come to the facility during the day shift “to take out management” and that he “wanted to bring a gun down to [the facility] and start shooting people.”

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EEOC Rules That Title VII Prohibits Discrimination Based on Sexual Orientation

In a 3-2 decision published on Thursday, July 16, 2015, the U.S. Equal Employment Opportunity Commission (“EEOC”) concluded that intentional discrimination against an employee based on their sexual orientation is sex discrimination- an act strictly prohibited under Title VII of the Civil Rights Act of 1964. “Discrimination on the basis of sexual orientation is premised on sex-based preferences, assumptions, expectations, stereotypes, or norms,” the EEOC said. As a result, agencies are now expected to treat claims involving discrimination on the basis of sexual orientation as a claim of sex discrimination under Title VII.

Thursday’s opinion marks yet another significant decision by the EEOC, which in recent years has expanded (or clarified) the extent to which Title VII protects against various forms of workplace discrimination involving sexual orientation or gender identity. As you may recall in 2012, the EEOC in Macy v. Holder found that intentional discrimination against transgender individuals was a form of sex discrimination, and thus actionable under Title VII. Since Macy, the EEOC has been quietly processing a steady number of claims alleging discrimination based on sexual orientation from private and public sector employees. The latest ruling provides clear, authoritative guidance on how to process such claims going forth.

So what does this mean for private employers? For employers who are subject to state or local law prohibiting sexual orientation discrimination or who already have established internal policies prohibiting sexual orientation discrimination, the EEOC’s ruling will have little impact on personnel practices. More than twenty jurisdictions, including Oregon, Washington, California, Minnesota, Utah, and the District of Columbia, already prohibit sexual orientation discrimination. However, Thursday’s ruling may open up employers in such states to both state and federal sexual orientation discrimination claims. For employers across the country, the EEOC’s latest ruling is indicative of how the prohibition of sex-discrimination continues to expand under Title VII, and provide new potential protections in those jurisdictions that currently do not have such state or local prohibitions.

Marriage Equality Is Nationwide

In Obergefell v. Hodges, the United States Supreme Court held that “[t]he right to marry is a fundamental inherent in the liberty of the person, and under the Due Process and Equal Protection Clauses of the Fourteenth Amendment couples of the same sex may not be deprived of that right and that liberty.” This historic opinion means that same sex couples in the U.S. can marry no matter where they live and that states may no longer restrict marriage only to heterosexual couples. While opinion polls now show a solid majority nationwide supporting marriage equality, that level of support is not uniform and this 5-4 decision will not eliminate continued debate and controversy.

However, marriage equality is now the law of the land. States must allow same sex couples to wed and governments, and employers must extend the rights and benefits of marriage to wedded same sex couples.

Oregon’s New “Ban the Box” Law Prohibits Criminal History Questions on Employment Applications

It’s been an active legislative session in Oregon this year regarding laws affecting the state’s employers.  Hot on the heels of enacting laws relating to paid sick leave, noncompete agreements, and employee privacy on social media, Governor Kate Brown also recently signed into law House Bill 3025.  That law will make it illegal for most employers to ask employment applicants criminal history questions on employment applications.  The new Oregon law takes effect January 1, 2016.

Oregon becomes the most recent of a number of states that have passed similar “ban the box” laws.  Under HB 3025, it will be illegal for most employers to ask job applicants criminal history questions on employment applications. Note that this does not mean that employers cannot use information regarding criminal history at all; just not on an initial application.  Criminal history questions still will be permissible at the initial interview or, absent an interview, may be asked after a conditional offer of employment has been made. Further, nothing in the Oregon legislation prohibits criminal background checks generally as part of the employment application process.

The legislation does not provide for a private right of action; administrative charges may be filed with the Oregon Bureau of Labor and Industries.

In addition to state and local “ban the box” laws like Oregon’s HB 3025, employers should also be mindful that over the past few years the U.S. Equal Employment Opportunity Commission (“EEOC”) has taken the position that employers’ overly broad use of criminal background checks can violate Title VII of the Civil Rights Act of 1964, because, the EEOC believes, such checks can have a “disparate impact” on job applicants of some racial groups, particularly Hispanic or African American applicants.  But as we have blogged about before, the EEOC’s interpretation that Title VII limits use of criminal background checks has been met with skepticism in the courts.

Oregon employers should review now their employment applications and their employment application processes to begin to get ready for the law’s implementation in 2016. Generally, criminal history questions should be removed from written or on-line employment applications. Managers who hire should be trained as to the appropriate scope and timing of criminal history inquiries.

Oregon Enacts State-Wide Paid Employee Sick Leave Which (Mostly) Replaces Local Ordinances in Portland and Eugene

Governor Kate Brown signed into law the new Oregon Paid Sick Leave (“OPSL”) law enacted by the Legislature on June 12. The new law becomes effective January 1, 2016. Oregon is the fourth state to enact a state-wide paid sick leave law after Massachusetts, Connecticut, and California. The text of the OPSL is available here.

The OPSL will look familiar to Oregon employers that have already been dealing with local PSL ordinances enacted in Portland and Eugene in recent years, which OPSL now preempts and replaces. OPSL largely tracks those local leave laws in substance, and generally requires employers to provide up to 40 hours of sick leave per year. Here is a detailed summary of its requirements, including where it differs from the Portland and Eugene ordinances. Continue Reading

It’s Coming: Overtime Pay for More Workers

Coming to a store or restaurant near you soon!  Supervisors will get overtime!

To be exempt from minimum wage and overtime requirements, currently a worker must perform certain duties (for example, supervise at least two other workers) and be paid a minimum salary of $455 per week ($23,660 per year). These are known as the white collar exemptions and they are categorized as Executive, Administrative, Professional, Outside Sales and Computer Professional. (Computer Professionals have to be paid a minimum of $27.63 per hour, in addition to meeting their duties test.)

The modest salary requirement was raised slightly in 2004 but hasn’t budged since. President Obama has now instructed the Department of Labor to increase that salary level to $50,440 in 2016 (the salary level for another exemption category referred to as “Highly Compensated Employees” is also being proposed to increase from $100,000 per year to about $122,000 per year). The DOL also proposes to add an escalator clause so that the salary level rises automatically over time, and it is also going to consider revising some of the duties tests.

What does this mean for employers?

This massive change in the law is not going to require congressional approval. All that is necessary is that the Department of Labor changes its rules and it is undoubtedly going to do that soon after the end of the 60-day rulemaking comment period.

The DOL estimates that 5 million workers will benefit from the change. And, if the agency tightens the duties tests, even more workers will lose the exemption. Every employer will need to review each of its positions that is currently classified as exempt to determine whether the position retains the exemption. Stay tuned.

Oregon Tightens the Screws on Noncompetes: 18 Months Will Soon Be the Maximum Period of Restriction

As we blogged about earlier, courts in most states just plain don’t like employee noncompete agreements. Particularly when it comes to mid- and low-level employees, courts worry that enforcing a noncompete agreement will hamper innovation, restrict competition, and unfairly burden a former employee’s ability to earn a living. For that reason, a court typically will review an noncompete’s justification, scope, and length with the judicial equivalent of a fine-tooth comb.

Courts have been picking away at the enforceability of employee noncompetes for years, but more recently, legislatures have jumped into the mix with varying levels of aggressiveness. California has long banned noncompetes outright, and several other states either have followed suit (e.g., North Dakota) or are considering whether to pass similar laws (e.g., Massachusetts, Washington). Still others have adopted laws that make it easier for employers to enforce noncompetes (e.g., Georgia), or are considering whether to do so to remedy past judicial reticence in the area (e.g., Wisconsin).

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