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

By Adam Belzberg, Tim O'Connell and Ryan R. Jones on May 11, 2018 Posted in wage and hour, Washington

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

By Bryan Hawkins on May 1, 2018 Posted in California, employer policies, Supreme Court

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

By Karin Jones on April 19, 2018 Posted in Updates, wage and hour

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

By Ryan R. Jones and Tim O'Connell on April 17, 2018 Posted in Statutes, Updates, Washington

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

California Supreme Court Instructs Employers How to Calculate Employee Overtime Pay Rate

By Bryan Hawkins on March 9, 2018 Posted in California, employer policies

In Alvarado v. Dart Container Corporation of California, the California Supreme Court determined how employers must calculate an employee’s overtime pay rate when the employee earns a bonus during a single pay period. While the holding was fairly fact specific, it is a reminder on an often ignored (but critical) issue in California employment law: the computation of an employee’s overtime rate of pay.

Alvarado involved a putative class action filed by a former Dart employee. Plaintiff alleged that he was a member of a group of Dart employees who, in addition to being paid on an hourly basis, also received a $15 per day flat sum “attendance bonus” if they worked on a Saturday or Sunday. The thrust of plaintiff’s complaint was that Dart had improperly factored the attendance bonus into his regular rate of pay, resulting in an improper calculation of his overtime rate of pay and, in turn, an underpayment of overtime pay.

The trial court granted Dart’s motion for summary judgment, which was affirmed by the Court of Appeal. The Supreme Court, however, reversed the Court of Appeal’s decision and found that Dart had used the incorrect calculation in factoring in the attendance bonus. Specifically, the Court held that the flat sum bonus at issue should be factored into an employee’s regular rate of pay by dividing the amount of the bonus by the total number of non-overtime hours actually worked during the relevant pay period.

In addition to clarifying how flat sum bonuses should be factored into an employee’s regular rate of pay, the Supreme Court also confirmed the value of the Department of Labor Standards Enforcement’s so-called “underground interpretive regulations.” These are regulations that did not comply with the California Administrative Procedures Act.

Dart is important because it informs employers how to factor in flat sum bonuses during a single pay period. Almost as important, however, the case confirms that calculating an employee’s overtime pay rate isn’t always as simple as multiplying the employee’s hourly rate by 1.5 and that there are significant legal consequences for employers making this type of (relatively) small and innocuous error.

California Proposes New Legislation Prohibiting Confidentiality Provisions in Settlement Agreements

By Bryan Hawkins on January 5, 2018 Posted in California

In the face of a continuing wave of highly publicized complaints of sexual misconduct in the workplace, California state senator Connie M. Leyva introduced Senate Bill 820. If passed, this law would prohibit the inclusion of nondisclosure terms in settlement agreements relating to actions alleging claims of sexual harassment or discrimination in the workplace. Continue Reading

Trump NLRB Shakes Up the Labor World in Striking Down Numerous Obama Board Decisions

By John Dudrey, Ryan Kunkel, Tim O'Connell and Jim Shore on December 19, 2017 Posted in Board settlement, Cases, Labor, News, NLRB, Updates

It might appear that in some years, the National Labor Relations Board (the Board) issues a series of decisions just as the year comes to a close, but it is not because the Board wants to give out holiday presents (or, from the employer’s perspective for the past several years, multiple lumps of coal). Rather, the year-end eruption of decisions comes about as the Board rushes to complete its work before one of the Board member’s term expires. This year was no different, as Chairman Miscimarra’s term ended on December 16. This time, employers have every reason to celebrate the gifts they received.

Within the last few days, the NLRB has overruled or indicated its intent to reverse several significant Obama Board decisions, including:

the controversial “joint employer” standards;
the creation of “micro units”;
the controversial 2014 “quickie election” rules;
the basis for the Board reaching out to strike down common employer policies, such as rules requiring civility in the workplace;
the degradation of the “dynamic status quo”; and
the standard for reviewing settlement agreements.

California Implements Significant Changes in the Employment Application Process, Employee Training, and Protected Leaves

By Bryan Hawkins on October 19, 2017 Posted in California, Legal, Updates, wage and hour

On October 12, 2017, California Governor Jerry Brown signed several bills regulating a wide range of employer actions, everything from the labeling of cleaning fluids to the employment application process. While compliance with all of these new laws is important, four are of particular importance as they directly impact the information employers can seek from potential applicants, the training that must be provided to current employees, and protected leaves.

AB 168 and AB 1008 restrict the information employers can obtain from potential job applicants. AB 168 makes it unlawful for California employers to either obtain or rely upon an applicant’s salary history to determine whether to offer an applicant a job or what salary to offer an applicant. The law, however, does not prohibit a job applicant from voluntarily and without prompting disclosing to a prospective employer his or her salary history. If a job applicant voluntarily discloses information in this way, then the employer is permitted to rely upon that history in determining the salary for that applicant.

AB 1008 imposes a statewide “ban-the-box” law. Specifically, this law prohibits California employers with five or more employees from (1) including on any application for employment any question that seeks the disclosure of an applicant’s conviction history or (2) inquiring into or considering an applicant’s conviction history prior to providing that applicant with a conditional offer of employment. The law also provides that employers who intend to deny an applicant a position of employment based upon that applicant’s conviction history must make an individualized assessment as to whether the applicant’s prior criminal history has a detrimental impact on the prospective employment. Employers must also provide applicants with notice of a preliminary decision to deny employment based on the individualized assessment and allow applicants the opportunity to challenge the accuracy of their conviction history. Prior to the signing of AB 1008, many local jurisdictions had enacted similar ordinances prohibiting the use of an applicant’s prior conviction history in the initial application process. With passage of AB 1008, this prohibition is now statewide. Continue Reading

California Responds to Increased Federal Immigration Enforcement Actions

By Bryan Hawkins on October 6, 2017 Posted in Immigration, Legal

On October 5, 2017, California Governor Jerry Brown signed AB 450. With the passage of this bill, California becomes the first state in the nation to enact a law prohibiting employers from providing voluntary assistance to immigration enforcement agents during workplace investigations.

Earlier this year, U.S. immigration authorities conducted a series of high-profile raids of workplaces across the country in an attempt to locate undocumented immigrants. In response, California Assembly member David Chiu introduced AB 450, the Immigrant Worker Protection Act. AB 450 prohibits both public and private employers from voluntarily providing immigrant enforcement (ICE) agents with access to nonpublic work areas or employee records, absent a judicial warrant or subpoena. AB 450 also mandates that employers provide certain notices to their employees concerning any inspections by ICE agents of I-9 Employment Eligibility Verification forms and the results of such inspections.

Critically, the law also provides for penalties of up to $10,000 for violations. While the law provides that enforcement of the sections concerning access to nonpublic work areas and employee records is limited to the California Labor Commissioner and/or Attorney General, the sections pertaining to required notices contain no such limitations. As such, private employees may be able to recover penalties for violations of these notice provisions pursuant to California’s Private Attorney General Act.

This law requires employers to walk a fine line. On one hand, employers must comply with federal law prohibiting them from hiring individuals without verifying their eligibility to work in the United States. On the other hand, AB 450 means that employers in California must also be cautious in how vigorously they apply immigration laws, e.g., voluntary compliance with a federal enforcement action.

Employers with California operations should promptly begin revising their employment processes and advising their management employees to ensure compliance with this new law. By failing to do so, they will leave themselves exposed to substantial liability from both public agencies and private employees.