California Enacts New Law Protecting as Privileged Workplace Sexual Harassment Complaints

On July 9, 2018, California Governor Jerry Brown signed Assembly Bill 2770.  This bill extends privileged communication status to certain communications by employees and employers regarding alleged sexual harassment and continues California’s efforts to address claims of sexual harassment in the workplace.

Prior to AB 2770, California law protected as privileged an employer’s responses to questions from prospective employers regarding a former or current employee’s job performance or qualifications, so long as such communications were made without malice and based on credible evidence.  Also privileged were an employer’s answer as to whether or not the employer would rehire a current or former employee.  Based on this law, employers could not be sued for libel or slander based on these privileged communications.  AB 2770 extends this privilege to (1) complaints of sexual harassment by an employee, made without malice, to an employer based on credible evidence and (2) as particularly relevant to California employers, communications between the employer and interested persons regarding a complaint of sexual harassment.  The new law also authorizes an employer to answer whether the decision to not rehire a current or former employee is based on the employer’s determination that the employee engaged in sexual harassment.

Similar to other bills introduced to address legitimate and reasonable concerns about sexual harassment in the workplace, AB 2770 forces employers to consider how they handle sexual harassment allegations and how to respond to questions from prospective employers regarding such allegations.  While ostensibly protecting employers from claims of libel and slander brought by current and former employees, statements to prospective employers regarding prior claims of sexual harassment could still result in possible litigation brought by that applicant, thereby forcing employers to defend these claims based on the position that such statements were made without malice.  On the other hand, if an employer refuses to answer questions from prospective employers regarding sexual harassment, and harassment issues arise in the subsequent employment, it is not difficult to imagine a situation where the new employer sues the former employer based on its failure to disclose such allegations during the application process.

AB 2770 is less than one week old, so it still needs to be seen precisely how it will be interpreted by California courts and whether it will be weaponized by plaintiff-side employment counsel.  Either way, it is clear that California is still dealing with this important issue and that California employers should continue to pay attention to this difficult and complex situation.

California Federal Court Suspends Enforcement of Certain Provisions in California’s Sanctuary Laws

On July 5, 2018, a federal judge in the Eastern District of California granted the U.S. Department of Justice’s (“DOJ”) request to temporarily prevent the state of California from enforcing key provisions of AB 450, one of three “sanctuary” laws that Governor Jerry Brown signed into law on October 5, 2017, and which took effect on January 1, 2018.  AB 450, known as the Immigration Worker Protection Act, provides that California employers:

  • May not allow federal immigration officials to access the employer’s nonpublic work areas unless the officials have a judicial warrant;
  • May not allow federal immigration officials to access employee records without a subpoena or judicial warrant;
  • Must provide notice to its employees before and after the federal government inspects the employer’s I-9 forms; and
  • May not re-verify an employee’s lawful work authorization status unless required to do so by federal law.

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Idaho Supreme Court Adopts New Standard for Defining “Cause” in Employment Cases

On June 28, 2018, the Idaho Supreme Court issued an opinion in a case entitled Lunneborg v. My Fun Life that outlines how cause will be defined in employment cases.  Simply put, this case could be a real game changer for employers and particularly those that have employment agreements with senior management or other executives.

This development means the following for employers:

  • Summary judgment is going to be much harder to obtain when cause is at issue;
  • Idaho now imposes a good-faith standard that demands “a balanced regard for the employee’s interest in continuing employment with the employer’s interest in efficient personnel decisions”;
  • The fact-finder, i.e., the judge or a jury likely composed of employees and not human resource professionals, lawyers or executives, is permitted to assess the objective reasonableness of the employer’s factual determination of misconduct;
  • Employers will be advised to retain an impartial (outside) third party investigator to undertake an investigation of the purported grounds for termination; and
  • Employees should be given notice and an opportunity to cure any deficiencies relied upon to support a termination decision—even when such a provision is not otherwise called for in the employment agreement.

Given My Fun Life, employers have two immediate action items:

  1. Consult the standards set forth in case every time you contemplate an employment termination that includes an element of cause. This will likely be the necessary when considering the termination of executives or other high-level corporate employees who receive a severance if they are terminated without cause; and
  2. Start thinking now about the employment agreements covering incumbents and future agreements with employees and whether something other than at-will employment is really necessary.

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Supreme Court Rules Mandatory Union Fees for Public Sector Employees are Unconstitutional

In yet another significant victory for employers, the United States Supreme Court has held that the First Amendment prohibits public sector unions from collecting mandatory “agency fees” from non-union members who do not consent to the payment of fees.  The Court’s ruling in Janus v. AFSCME, Council 31 overturns prior precedent that allowed public sector unions to collect these mandatory fees from employees who choose not to be a part of the union. Continue Reading

Oregon’s Secure Scheduling Law Goes into Effect July 1: Are You Ready?

The 2017 Oregon legislature passed a “secure scheduling” or “fair work week” law that imposes significant requirements on certain categories of large employers.  The law, available here, goes into effect July 1, 2018.  We previously blogged about the law here.

Are You a Covered Employer? 

The law applies to retail, hospitality, and food services employers with 500 or more employees worldwide.  Continue Reading

Significant Victory for Employers: Supreme Court Upholds Class Action Waivers in Arbitration Agreements

In a significant win for employers, the United States Supreme Court has issued a landmark decision upholding the use of class action waivers in employment arbitration agreements.  This ruling permits employers across the country to enforce individual arbitration agreements with employees, even where the agreement requires an employee to pursue legal claims on an individualized, rather than class or collective, basis.

Background

The Court’s decision in Epic Systems Corp. v. Lewis, No. 16–285 (U.S. May 21, 2018) (consolidated cases), returns to the status quo that existed for decades until the Obama National Labor Relations Board (“the Board”) reversed course in 2012 and held that employment agreements that require employees to individually arbitrate disputes violate the National Labor Relations Act (“NLRA”).  Continue Reading

No Peace for Piece-Rate Pay in Washington Agriculture

In yet another blow to agricultural employers, grab your stopwatches. In Carranza v. Dovex Fruit Co., the Washington Supreme Court has just held that agricultural employers are required to compensate piece-rate workers on a separate hourly basis for time spent performing tasks outside the specific scope of the piece-rate work.

In a narrow 5-4 majority, the Court concluded that the time spent performing tasks outside of piece-rate picking work must be compensated on an hourly basis. The Court then went on to further hold that tasks outside the scope of “piece-rate picking work must be paid at the minimum wage or a contractually agreed rate, whichever is higher.

The Court rested its opinion on an interpretation of the state Minimum Wage Act (“MWA”) that requires employee compensation “‘at a rate of not less than [the applicable minimum wage] per hour.’” In doing so, the Court rejected the long-standing application of the MWA that allowed flexible compensation systems so long as employees were paid above the minimum wage for all hours worked in a week. The Court concluded that the regulations that expressly permitted what it referred to as “workweek averaging” were not applicable to agricultural workers. Thus, the Court was explicit that its holding in Carranza was limited to agricultural employment.

Agricultural employers can take some small solace from the fact that the Carranza decision was made by a narrow majority, and generated unusually sharp language between the majority and the two dissenting opinions; that is rare for the usually ideologically homogenous Washington Supreme Court, and portends that future developments may be better for agricultural employers. For now, though, the bottom line for Washington farmers is that “agricultural workers may be paid on a piece-rate basis only for the hours in which they are engaged in piece-rate picking work. Time spent performing activities outside the scope of piece-rate picking work must be compensated on a separate hourly basis.”

In addition to upending traditional compensation systems that were popular with both farmers and their employees, the Carranza decision leaves many important questions unanswered. Critically, the Court refused to address which tasks fall outside the scope of piece-rate work , and which tasks must be compensated on an hourly basis. The Court indicated this was a factual question, but the contentions of the parties illustrate the fine lines that must be drawn. For example, the Carranza plaintiffs acknowledged that moving a ladder between trees in the field was within the scope of piece-rate work, but moving a ladder from the truck to the field was not.

On a going forward basis, the Court acknowledged that farmers and their employees can enter into agreements setting the hourly rate applicable to the non-piece rate time, so long as that time is greater than the minimum wage. The Court offered no guidance, however, for how its decision in Carranza would be applied on a retroactive basis.

Carranza may lead to sweeping changes for how agriculture uses a piece-rate payment system, much to the dismay of employers. While we await a ruling from the trial court on what tasks are and are not piece-rate work, every farmer or other agricultural employer would be well-advised to reach out to counsel and update their compensation systems to keep ahead of the impacts of this decision.

California Supreme Court Embraces New Employee-Friendly Worker Classification Standard

In Dynamex Operations West, Inc. v. Lee, the California Supreme Court created a new employee-friendly test for determining whether workers are properly classified as employees or independent contractors.  While providing a level of certainty lacking in the prior standard, the Court’s new test significantly increases the burden on California employers in demonstrating that their workers are properly classified as independent contractors.

Since 1989, the leading test in California for distinguishing employees and independent contractors was the multifactor standard set forth in S.G. Borello & Songs, Inc. v. Department of Industrial Relations.  Under Borello, the key question was whether the employer “[had] the right to control the manner and means of accomplishing the result desired.”  In addition to this factor, the Borello test also endorsed multiple “secondary” indicia in analyzing and determining the employment relationship. Continue Reading

Ninth Circuit Rules That Basing Employees’ Wages on Their Prior Compensation Violates the Equal Pay Act

Employers in the Ninth Circuit (which includes Washington, Oregon, California, Alaska, Idaho, Montana, Nevada, Arizona, and Hawai’i) can no longer justify pay differentials between male and female employees based upon employees’ prior compensation. In an April 9, 2018 decision, Rizo v. Yovino, the Ninth Circuit Court of Appeals overruled prior Circuit law to hold that an employee’s previous compensation, either alone or in combination with other factors, cannot form the basis of a wage differential between men and women.

While the Equal Pay Act permits “a differential based on any other factor other than sex,” the Court held that an employee’s prior compensation is not a “factor other than sex.” Specifically, the Court held that the above “catchall” exception under the Equal Pay Act is intended to allow employers to rely upon only job-related factors, such as experience, educational background, ability, or prior job performance.  Prior compensation, the Court opined, is not job-related. Continue Reading

Washington Legislature Enacts Multiple Anti-Employer Statutes

No man’s life, liberty or property are safe while the legislature is in session.

· Judge Gideon J. Tucker

In the recently concluded session, Washington legislators enacted numerous laws that will adversely affect employers of all sizes across the State. With so many changes, it is key that employers stay up to date and understand the new challenges they will face in running their workplaces.

WASHINGTON HAS ‘BANNED THE BOX’ (2SHB 1298)

Washington is now firmly on the bandwagon to “ban the box,” barring questions about criminal convictions on initial employment applications.  Employers are now prohibited from inquiring into an applicant’s criminal background until the employee is determined to be otherwise qualified for the position.  The new law thus provides another area where employers have to tread carefully when rejecting applicants—an employer is much more baldly exposed to disparate impact claims arising from applicants rejected after the employer had determined they were otherwise qualified for the position.  The law includes several exceptions, including for law enforcement, employers whose employees would have unsupervised access to children or vulnerable adults, and other employers required by law to conduct criminal background checks.  The Attorney General’s Office is in charge of enforcing the law, and employers face an escalating system with increased fines for each subsequent violation.

Suggested Action: Remove any criminal background questions from job applications.  While the statute bars advertising that states “no felons” or “no criminal background” or the like, nothing precludes employers from advising applicants at the time they apply that they will have to pass a criminal background check once they have been determined to be qualified for the job.  Employers should monitor applicants screened out by the results of a criminal background check.  If an employer detects a disparate impact as a result of that screening, the employer should ensure that its actions are consistent with business necessity. Continue Reading

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