Sarah Abraham and William Jhaveri-Weeks recently published an article in Plaintiff Magazine discussing the rights of employees in California to engage in political activity.  The article may be of interest to employees and their attorneys confronting negative employer actions based on an employee's political activities.

The Ninth Circuit held yesterday that a warehouse worker in an Adidas distribution warehouse in California was not subject to arbitration because he was engaged in foreign or interstate commerce.  Key facts included that the employee transported packages to and from storage racks, helped prepare packages for shipment, and played a necessary role in facilitating the continued movement of goods that were still moving in interstate commerce when the employee interacted with them.  The case is an important reminder to employment lawyers to consider whether an employee who has signed an arbitration agreement falls within this exception to the Federal Arbitration Act.  The case, Ortiz v. Randstad Inhouse Services, LLC, No. 23-55147 (9th Cir. Mar. 12, 2024) is available here.

Today, the California Supreme Court settled a split of appellate court authority by concluding that trial courts in California do not have the authority to strike PAGA claims on manageability grounds, including based on class action manageability requirements.  The ruling is a positive development for employees seeking to enforce the Labor Code through PAGA.  The opinion, Estrada v. Royalty Carpet Mills, Inc. (January 18, 2024) (S274340) is available here.

The Pregnant Workers Fairness Act (“PWFA”) and the Providing Urgent Maternal Protections Act (“PUMP Act”) are new federal laws that create additional protections for pregnant and lactating employees, expanding upon existing protections under Title VII, the Americans with Disabilities Act (“ADA”), the Family and Medical Leave Act (“FMLA”), and the Fair Labor Standards Act (“FLSA”).  The new laws clarify existing rules and are a positive development for pregnant and lactating employees, but California law still has stronger protections for this group of workers.

Pregnant Workers Fairness Act (PWFA). Effective June 27, 2023, the PWFA requires employers with at least 15 employees to provide reasonable accommodations to pregnant employees and applicants with limitations related to pregnancy, childbirth, or related medical conditions, unless providing an accommodation would cause undue hardship.  Previous rules required employers to provide reasonable accommodations only when the pregnancy-related condition qualified as a disability under the ADA.  The PWFA also protects pregnant employees who are temporarily unable to perform essential job functions, whereas the ADA only protects employees able to perform essential job functions with or without reasonable accommodations.  The Equal Employment Opportunity Commission has provided FAQs about the PWFA and is expected to issue regulations.  A copy of the PWFA is available here.

Existing California law has more stringent rules than the PWFA.  California’s Pregnancy Disability Leave (“PDL”) law applies to employers with 5 or more employees, does not have an undue hardship exception, and specifies that employers must provide an unpaid leave of absence, a job transfer to an existing open position, or a reasonable accommodation if the employee’s doctor deems the accommodation “medically advisable.”

Providing Urgent Maternal Protections Act (PUMP Act) The PUMP Act expanded existing federal protections that required employers to provide break time and a private location for lactating employees to express breast milk.  Whereas prior law (under the Affordable Care Act of 2010) only applied to employees classified as nonexempt under the FLSA, the PUMP Act expands these protections to exempt/salaried employees.  The PUMP Act also creates a private right of action, with the requirement that employees seeking to enforce their right to a private location must provide employers notice and an opportunity to correct violations.  The existing rules are otherwise unimpacted:  The FLSA requires employers to provide break time “each time [a lactating] employee has need to [breastfeed]” for one year after the child’s birth, and to provide a functional private location other than a bathroom.  The PUMP Act took effect on December 29, 2022, and employees could begin bringing private lawsuits as of April 28, 2023.  A copy of the PUMP Act is available here.

California Labor Code section 1030 requires employers to allow a reasonable time for lactating employees each time the employee has a need to breastfeed.  The state law does not contain the one-year limitation on the employer’s obligation to provide break time.  California law also does not require the employee to provide prior notice to the employer before filing a lawsuit. 

​Posted by Ally Girouard

Today the Ninth Circuit Court of Appeal struck down a 2020 California law that forbade employers from requiring employees to waive their right to file certain employment law claims in court, including claims for discrimination or violation of state wage laws.  The clear intention of the law (known as Assembly Bill 51, or AB51) was to prevent employers from forcing arbitration agreements on employees, and the Ninth Circuit held that the Federal Arbitration Act conflicted with and preempted AB 51.  The law had been drafted in an attempt to avoid such a preemption decision – an attempt now proven to be in vain.  The decision likely puts to rest more than two years of uncertainty about the state of the law.

In response to a suit by the United States Chamber of Commerce, a federal district court issued a preliminary injunction suspending enforcement of the law shortly after it was passed.  A Ninth Circuit panel reversed in part in September 2021, vacating the preliminary injunction as to the key portion of the law but leaving it in place with respect to the portion that imposed criminal and civil penalties for its violation.  See Chamber of Comm. of the U.S. v. Bonta, 13 F.4th 766 (9th Cir. 2021).  Judge Ikuta, who has authored key Ninth Circuit decisions protective of arbitration, dissented.  The Chamber of Commerce petitioned for a rehearing en banc, and the panel put the petition on pause to await the U.S. Supreme Court’s decision in Moriana v. Viking River Cruises, Inc.  After the Viking River opinion came out, the panel voted to withdraw its September 2021 opinion, with Judge Fletcher joining Judge Ikuta in the order.  Thus, it was perhaps not a surprise that in today’s opinion, Judge Fletcher changed positions and joined the opinion authored by Judge Ikuta. 

Today’s opinion relied on U.S. Supreme Court precedent from the past ten or so years that has greatly expanded the role of arbitration agreements in employment and consumer disputes.  Under those authorities, Judge Ikuta’s opinion holds that AB 51 is void “[b]ecause the FAA’s purpose is to further Congress’s policy of encouraging arbitration, and AB 51 stands as an obstacle to that purpose.”  The court rejected arguments from the State based on the legislature’s explicit attempt to avoid preemption when drafting the statute – i.e., the law was drafted to forbid parties from entering into agreements that waive the judicial forum, but it did not actually render such agreements unenforceable.  The Ninth Circuit responded that “AB 51’s penalty-based scheme to inhibit arbitration agreements before they are formed” is the type of device “evincing hostility toward arbitration that the FAA was enacted to overcome.”
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In dissent, Judge Lucero pointed out that the Supreme Court “has never held nor implied that employers may require arbitration as a condition of employment,” and stated that AB 51 merely codified the noncontroversial principle that “arbitration is a matter of contract and agreements to arbitrate must be voluntary and consensual.”  The late Justice Ginsburg pointed out in powerful dissents in some of the cases relied on by Judge Ikuta that the FAA was not intended by Congress to have the kind of power that the Supreme Court has given it in recent years.  Given the make-up of the Supreme Court, chances of reversal of today’s decision seem small.

The decision, Chamber of Commerce v. Bonta, No. 20-15291 (Feb. 15, 2023), is available here.

Posted by Ally Girouard and William Jhaveri-Weeks

On September 27, 2022, in an ongoing effort to combat gender-based pay inequity among California workers, Governor Newsom signed S.B. 1162, creating new pay disclosure and reporting requirements for employers.  According to data from the U.S. Bureau of Labor Statistics, women in California make 88 cents for every dollar a man makes for the same work, and the wage gap is greater for women of color.

The new law requires employers with 15 or more employees to include a pay scale in any job posting and to provide a pay scale to current employees upon request.  A pay scale is the “salary or hourly wage range that the employer reasonably expects to pay for the position.”  The law also requires all employers to maintain records of job title and wage history for each employee until three years after the end of employment, and the Labor Commissioner has authority to inspect these records to determine if there is a “pattern of wage discrepancy.”  If an employer fails to comply, an aggrieved party may file a complaint with the Labor Commissioner or a civil action seeking injunctive relief, and the Labor Commission may impose a civil penalty ranging from $100 to $10,000 per violation.  The failure to maintain the required records creates a rebuttable presumption in favor of the aggrieved party’s claim.

S.B. 1162 also builds on an existing law that requires companies with more than 100 employees to provide annual reports to the Civil Rights Department (“CRD,” formerly the DFEH) containing pay data organized by establishment, job category, sex, race, and ethnicity.  The new law expands the categories of information that companies must include in their annual reports.  For instance, employers must now provide the mean and median hourly rates for each combination of race, ethnicity, and sex within each of ten job categories, such as executive-level employees, laborers, and service workers.  The CRD can seek a court order requiring compliance, and a court may impose civil penalties of up to $100 per employee per violation, and up to $200 per employee for continual violations.

S.B. 1162 amends Labor Code section 432.3 and Government Code section 12999, and takes effect January 1, 2023.

Posted by Ally Girouard

On May 23, 2022, the California Supreme Court held that the extra hour of pay (“premium pay”) owed to an employee who misses a rest or meal break is “wages.”  This means that premium pay must be reported on the employee’s wage statements under Labor Code section 226(a), and if such payments are outstanding at the time the employee separates from employment, the employer may be subject to "waiting time penalties" under Labor Code section 203 for failure to pay all wages due at discharge.
 
Prior to the decision, it was unsettled whether missed-break premium pay constituted "wages" under sections 226(a) and 203.  The Supreme Court reasoned that, although premium pay for missed rest and meal breaks is intended to compensate the employee for the missed break, it is also meant to compensate for work the employee performed during the break period, and thus it qualifies as "wages."  Under the decision, an employer’s failure to report premium pay accurately on wage statements may give rise to statutory penalties under Labor Code section 226(e), and an employee who has not received all premium pay owed at the time of discharge may be able to recover waiting time penalties under Labor Code section 203.
 
Additionally, the Supreme Court confirmed that meal and rest break violations are subject to a prejudgment interest rate of 7 percent.
 
The decision, Naranjo v. Spectrum Security Services, Inc., No. BC372146 (May 23, 2022), is available here.

Posted by Ally Girouard

On March 3, 2022, President Biden signed into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.  The law, which passed with broad bipartisan support, will have a major impact on the field of sexual harassment litigation, ensuring that such cases can be brought in public court proceedings, rather than being forced into private arbitration. 
 
Many employees are required to sign “arbitration agreements” as a condition of employment.  Until now, such agreements have largely prevented employees from pursuing public lawsuits alleging that they have been sexually harassed.  By forcing such claims into private arbitration, employers have been able to prevent the employee from bringing a public proceeding and to deprive the employee of the right to a jury trial.  Arbitration also may carry limitations on discovery that would not exist in court, and generally deprives the parties of a right to appeal the arbitrator’s decision.  The new law ends the practice of forcing claims of sexual harassment or sexual assault into arbitration.
 
The new law also ends the practice of allowing arbitration agreements to prohibit class actions involving sexual harassment and sexual assault claims.  Arbitration agreements have been a central tool for employers to restrict the right of employees to bring class actions in recent years.   
 
Under the new law, courts, not arbitrators, will decide whether the new law applies in a given case (i.e., preventing an arbitration agreement from “delegating” that threshold question to an arbitrator).
 
Courts may soon flesh out questions raised by the law.  For example, when a case involves allegations of sexual harassment as well as other allegations (e.g., harassment based on a different characteristic, or wage and hour violations), will the whole case remain in court, or will some cases be subject to proceeding partly in court and partly in arbitration?  Questions may also arise concerning the effective date of the Act; the Act states that it applies to any dispute or claim that “arises or accrues” after the date of the enactment of the Act (March 3, 2022) – how will this apply to allegations of sexual harassment that (in whole or part) occurred prior to the date of the Act, but are not framed as a ”dispute” until after the Act was passed?  Could employers attempt to invoke this new federal law as a basis for removing cases to federal court? 
 
Regardless of the outcome of these questions, the new law is a landmark development, restoring the benefits of the judicial process to individuals whose sexual harassment claims might otherwise have been forced into private arbitration.  
 
A copy of the law is available here.
 
Posted by Stanton Baker

On January 27th, the California Supreme Court clarified the proper method for presenting and evaluating whistleblower retaliation claims under Labor Code § 1102.5. It held that once an employee demonstrates by a preponderance of the evidence that the employee’s protected whistleblowing was a “contributing factor” in an adverse employment action, the burden shifts to the employer to demonstrate by clear and convincing evidence that the alleged adverse employment action would have occurred anyway for legitimate, independent reasons. The Court rejected the employer’s argument that the McDonnell Douglas burden-shifting test applied.  The case, Lawson v. PPG Architectural Finishes, Inc., S266001, is available here.
 
Plaintiff Wallen Lawson was responsible for stocking and merchandising paint products in stores in Southern California. He alleged that his supervisor instructed him to incorrectly mix customer orders of less popular paint types so that the stores would have to offer them at a discount, and they would subsequently be sold, instead of being returned to his employer. Lawson complained to his company’s central ethics hotline twice about this practice. Lawson’s performance approval ratings were already low, and Lawson was subsequently fired, with the Company asserting that the termination was based on low performance ratings.  Lawson brought a claim for retaliation against his employer in federal court in Los Angeles, and the court applied the McDonnell Douglas burden-shifting test, finding that Lawson could not demonstrate that his employer’s proffered legitimate reason for firing him was a pretext for retaliation. On appeal, the Ninth Circuit found that the case would likely turn on the issue of which test to apply, and certified the question to the California Supreme Court.

The California Supreme Court sided with Lawson, finding that the district court should have applied the "contributing factor" test outlined in Labor Code § 1102.6. This test is more plaintiff-friendly, and recognizes that there may be multiple reasons for a termination, rather than viewing a termination as wholly legitimate or illegitimate. It allows for a more nuanced consideration of the motives of an employer, requires a heighted “clear and convincing” showing by the employer, and does not require the employee to show pretext. The court stated that McDonnell Douglas contains a presumption of “exclusive cause” for firing, which makes it particularly unsuitable for a mixed-motive standard like that outlined in 1102.6. 

​Posted by Stanton Baker (Law Clerk)

See our article about SB 331, published in Law 360, available here.