On December 15, the U.S. Supreme Court changed course and announced that it would decide whether representative claims brought under California’s Private Attorneys General Act (known as “PAGA”) can be waived by an otherwise enforceable arbitration pact—taking on a years-long conflict between the California Supreme Court’s 2014 Iskanian v. CLS Transportation Los Angeles, LLC decision (holding that arbitration agreements cannot bar PAGA claims) and the U.S. Supreme Court’s own 2018 Epic Systems Corp. v. Lewis decision (holding that courts must enforce arbitration agreements under the Federal Arbitration Act (“FAA”), including those containing class/collective action waivers). You can read more about the Epic Systems holding in Epic Shift: Supreme Court Enforces Class Action Waivers in Arbitration Agreements and The Epic Systems Decision: Where Do Employers Go from Here?
Critics of Iskanian and its progeny essentially argued to the U.S. Supreme Court that it allowed an end run around the FAA, which preempts any state law that restricts the enforceability of arbitration agreements.
The petition was filed on behalf of Viking River Cruises, one of many filed by employers across the Golden State this year, each asking the U.S. Supreme Court to weigh in on the Iskanian versus Epic Systems PAGA conflict.
The Blank Rome team will be watching this one closely and with bated breath, as the Supreme Court’s ruling will impact thousands of businesses and have fundamental and profound effects on representative litigation both in California and across the United States.
With COVID-19 surging once again across the United States, yesterday, September 9, 2021, President Joe Biden announced a six-part plan for tackling the rising number of COVID-19 cases throughout the country. President Biden’s announcement includes a mandate that large employers require vaccines or weekly COVID-19 testing for their employees, as well as a mandate that all federal workers and contractors be vaccinated. Estimated to affect 100 million American workers, here are some important details employers should know:
All employers with 100 or more employees must ensure their workforce is fully vaccinated or require any workers who remain unvaccinated to produce a negative COVID-19 test at least on a weekly basis prior to coming to work.
Covered employers are required to provide paid time off to employees to get vaccinated or recover from any side effects of getting vaccinated.
All federal executive branch workers and employees of contractors that do business with the federal government are required to be vaccinated, with no ability to opt out and instead be subject to regular testing (Blank Rome’s government contractor FAQs about the executive order can be found on our Government Contracts Navigatorblog).
Large entertainment venues like sports arenas, large concert halls, and other venues where large groups of people gather are asked to mandate that their patrons are vaccinated or show a negative COVID-19 test for entry.
Healthcare facilities receiving Medicare and Medicaid reimbursement, including but not limited to hospitals, dialysis facilities, ambulatory surgical settings, and home health agencies, must vaccinate their employees.
The vaccination requirement for nursing home facilities will now apply to nursing home staff as well as staff in hospitals and other Centers for Medicare and Medicaid Services regulated settings, including clinical staff, individuals providing services under arrangements, volunteers, and staff who are involved in direct patient, resident, or client care.
Effective September 1, 2021, new provisions in the Texas Commission on Human Rights Act (“TCHRA”) provide greater protections and remedies for employees alleging sexual harassment. Key changes include the following:
The new provisions set a heightened standard for an employer’s response to a sexual harassment complaint. An employer now “commits an unlawful employment practice if sexual harassment of an employee occurs and the employer or the employer’s agents or supervisors: (1) know or should have known that the conduct constituting sexual harassment was occurring; and (2) fail to take immediate and appropriate corrective action.” This language somewhat (but not exactly) mirrors the Title VII analysis for coworker harassment claims, which considers whether the employer took “prompt” and effective remedial action. The amendments to the TCHRA do not define what amounts to “immediate and appropriate corrective action,” or to what degree “prompt” differs from “immediate,” and this is likely to be a disputed and litigated issue in Texas courts. Additionally, this new standard of proof does not differentiate between coworker and supervisor harassment claims—another potentially significant departure from Title VII, which generally holds employers liable for supervisor harassment unless they are able to establish an affirmative defense.
Unlike the remainder of the TCHRA, which applies to employers with 15 or more employees, the new sexual harassment provisions essentially cover all employers (anyone who “employs one or more employees”) and further opens the door to potential individual liability for managers, coworkers, or HR (someone who “acts directly in an interests of the employer in relation to an employee”). As a result, Texas plaintiffs may begin naming supervisors, HR professionals, and other involved employees as defendants in sexual harassment lawsuits—and those individuals may be held personally liable for damages if the plaintiff is successful.
Earlier this year, Washington, D.C.’s mayor signed legislation, the “Ban on Non-Compete Agreements Amendment Act of 2020” (the “Act”), which imposes sweeping limitations on during-employment and post-employment non-compete agreements for employees in the District of Columbia. We previously reported on this legislation.
Although the Act stated that it was to take effect following its publication in the District of Columbia Register, it also included the following provision: “This act shall apply upon the date of inclusion of its fiscal effect in an approved budget and financial plan.”
In other words, notwithstanding the Act’s definition of an earlier effective date, the Act was not slated to go into effect until the date it was included in D.C.’s 2022 budget—referred to as the “applicability date”—which most expected to occur by October 1, 2021. Shortly after passage, there were rumblings that Council members were considering amendments to the law—ranging from, among other things, a delay in the applicability date to exemptions for bona fide conflict of interest policies to income thresholds for the ban on non-competes, as opposed to an outright ban.
On August 10, 2021, the D.C. Council approved a budget—signed by D.C.’s mayor on August 23, 2021—that delays the applicability date of the Act until April 1, 2022. This postponement is significant because the Act’s limitations on non-competes is not retroactive, which provides employers with more time to continue to enter into non-compete agreements that satisfy the existing standards for determining the enforceability of non-compete restrictions rather than the far more limiting standards included in the Act.
Time will tell whether any substantive amendments materialize and modify the Act’s limitations prior to April 1, 2022.
If an employer does not provide an employee with a compliant meal or rest period, Labor Code section 226.7(c) requires the employer to “pay the employee one additional hour of pay at the employee’s regular rate of compensation.” In Ferra v. Loews Hollywood Hotel, LLC, the California Supreme Court held that the “additional hour of pay” for meal or rest period violations must encompass all non-discretionary payments, as well as hourly wages. Thus, if an employer pays an employee non-discretionary incentive pay or bonuses, or commissions, those amounts must be included in determining the “hour of pay” the employer owes to the employee for a meal or rest period violation. (Note: The same rule applies to a “recovery” period, which is less common and refers to a cooldown period afforded an employee to prevent heat illness.)
Many employers have initiated practices of monitoring time records for apparent meal period violations and automatically paying an hour of pay accordingly. If the hour of pay was paid at an employee’s base hourly rate that did not include non-discretionary payments, then additional amounts may now be owed to the employee. Also, given the increased cost to an employer of a meal period premium, employers who provide employees flexibility regarding the scheduling of their meal periods may want to reconsider that flexibility and instead insist on strict meal period scheduling and reporting to avoid potential exposure.
Under the newly enacted Section 11 of the Equal Pay Act, any private employer with more than 100 employees in Illinois must obtain an “equal pay registration certificate” from the Illinois Department of Labor. Employers must obtain this certificate within three years of the amendment’s effective date—i.e., by March 23, 2024—and then every two years thereafter.
To apply for this certificate, the employer must submit a $150 filing fee, the employer’s most recent EEO-1 report, and a report of all employees from the past calendar year “separated by gender and the race and ethnicity categories as reported in the business’s most recently filed Employer Information Report EEO-1, and report the total wages . . . paid to each employee during the past calendar year.”
Do not be surprised if, before the end of 2021, the federal government begins requiring contractors to certify or represent that their employees have received COVID vaccinations. The federal government has long conditioned contract awards on contractor compliance with emerging social policy mandates. This practice dates backs to the 1960s, when collateral social policy clauses began appearing in federal contracts. The National Emergency created by COVID-19 would appear ripe for a similar federal government action in federal contracting.
Several factors are converging in the United States which signal the potential for a COVID vaccine Certification or Representation. First, the supply issue should be mostly resolved by June 30, 2021. The Biden administration has committed to make enough vaccines available for every adult in the country by the end of May 2021. Second, the administration has been extremely active in making procurement law changes to conform to its policy objectives. Crafting an Executive Order on COVID Vaccines for federal contractor employees is clearly within the administration’s wheelhouse and target zone. Third, as reported in the March 8, 2021, Wall Street Journal, the largest employers in the country, across all sectors, are already engaged in large scale efforts to vaccinate their own employees. Fourth, while the law in this area is still evolving, the prevailing view is that, with certain exceptions, private employers are legally permitted to mandate their employees receive COVID vaccinations as a condition of continuing employment, subject to a variety of considerations related to employee legal, medical, and workplace accommodations. Finally, the federal government might find a federal contractor vaccine mandate a helpful leverage point in the evolving conflict with those states choosing to disregard COVID protections. Continue reading “Will Federal Contractors Be Required to Certify Employee COVID Vaccinations?”
A recent decision by the Delaware Chancery Court in the clawback litigation between McDonald’s Corporation and its former CEO highlights the meaning and impact of a common contractual provision: the “integration clause.” Such provisions (sometimes also called “entire agreement” clauses) state that the contract at issue embodies the entire agreement of the parties and supersedes all prior agreements and understandings between them. The Delaware court rebuffed an effort by the former CEO to argue that the integration clause in his separation agreement precludes McDonald’s from asserting that the CEO’s false statements made while negotiating that agreement provide a basis for seeking repayment of severance benefits he received. The court’s opinion lays out the requirements that a contract must satisfy in order to prevent a party from using the other party’s deceptive or fraudulent statements made prior to entering the contract to seek repayment of the consideration provided. The case is McDonald’s Corporation v. Stephen J. Easterbrook.
Background of the McDonald’s Litigation
In 2019, McDonald’s Corporation parted company with its then-CEO, Stephen Easterbrook, finding that he had engaged in an inappropriate relationship with an employee. McDonald’s and Mr. Easterbrook negotiated and entered into an agreement that treated his separation as “without cause” and paid him significant severance benefits. Several months after Mr. Easterbrook’s departure, additional improprieties were brought to the attention of McDonald’s Board, resulting in McDonald’s filing a lawsuit to claw back the severance benefits previously paid. McDonald’s argues that it would not have agreed to the terms of the separation agreement if Mr. Easterbrook had not covered up the extent of his indiscretions.
As a reminder, California’s new pay data reporting for employers with 100 or more employees (and at least one employee in California) is due on or by March 31, 2021. You can read more about these new requirements here. California’s Department of Fair Employment and Housing (“DFEH”) has released helpful FAQs to walk employers through the filing requirements and required content. On February 1, 2021, the DFEH also published a 67-page California Pay Data Reporting Portal User Guide. While the portal itself will not be available until February 16, 2021, the user guide contains helpful information on pay data report content, differences and similarities between the California report and the EEO-1 report, and navigating the Pay Data Reporting Portal (once available), as well as sample reports. Please contact us with any questions.
Late in December 2020, the District of Columbia Council passed legislation titled, “Ban on Non-Compete Agreements Amendment Act of 2020” (the “Act”), barring the use of non-compete agreements and workplace policies that restrict D.C. employees from competing with their employers after, and even during, employment. This week, the Mayor signed the law. Barring an unlikely intervention by Congress (which has authority to review legislation passed by the D.C. Council), the law will take effect after the 30-day Congressional review period.
This Act follows a recent, growing trend to limit the use of non-competes, but it goes further than other recent legislative efforts: it applies to employees at all income levels and even bars the use of “during-employment” non-competes and workplace policies such as those aimed at preventing disloyalty and abuse of company resources. Several key areas warrant emphasis.
Ban Applies to Employees Performing Work in D.C. for Employers that Operate in D.C.
The Act applies to “employees,” defined as any “individual who performs work in the [District of Columbia] on behalf of an employer and any prospective employee who an employer reasonably anticipates will perform work on behalf of the employer in the [District of Columbia].” The term “employer” is defined as “an individual, partnership, general contractor, subcontractor, association, corporation, or business trust operating in the District, or any person or group of persons acting directly or indirectly in the interest of an employer operating in the District in relation to an employee, including a prospective employer.”