Category: Employment litigation

California Employers Fight Back on Governor Newsom’s Attempt to Prevent Mandatory Arbitration Agreements, Seeking to Enjoin AB 51

Natalie Alameddine

As the new year approaches, California employer associations have taken action to prevent Assembly Bill (“AB”) 51 from taking effect. As referenced in this BR Workplace Post, AB 51, signed by Governor Gavin Newsom on October 10, 2019, prohibits mandatory arbitration in cases under the Fair Employment and Housing Act (“FEHA”) and California Labor Code, and also prohibits employers from retaliating against individuals who do not consent to arbitration agreements. AB 51 is in part motivated by the #MeToo movement, and part reflective of California’s ongoing battle against the U.S. Supreme Court’s unwavering support of arbitration. It is designed to ensure employees maintain the right to bring FEHA and wage-and-hour actions in court, rather than forced arbitration as a condition of employment.

As employers across the state stare down the barrel of AB 51, the California Chamber of Commerce filed a Complaint for Declaratory and Injunctive Relief in federal court in California last week seeking to prevent AB 51 from going into effect on the grounds that it is invalid and preempted by the Federal Arbitration Act (“FAA”). The FAA has a long-established policy favoring arbitration as a means for efficient and individualized alternative dispute resolution. The U.S. Supreme Court has also steadfastly refused to allow employees to circumvent the FAA and file actions in court.

The hearing on the motion for preliminary injunction is set for January 10, 2020, nine days after AB 51’s effective date. Only time will tell how the court will rule. In the meantime, employers should contact legal counsel to determine the best, tailored course of action given their specific operations, workforce, and overall risk tolerance.

Ding, Dong, the Fluctuating Work Week Overtime Method Is Dead … in Pennsylvania!

Jason E. Reisman

Just yesterday, the Pennsylvania Supreme Court issued a decision in a case involving the “fluctuating work week” (“FWW”) method of paying overtime that has been percolating in the Commonwealth courts for almost six years. The Pennsylvania high court held that, although the U.S. Supreme Court has confirmed the validity of the FWW method under the Fair Labor Standards Act (“FLSA”), Pennsylvania has not incorporated it into state law; and its use in Pennsylvania is therefore not permitted.

The case is Chevalier v. General Nutrition Centers Inc. In it, the Pennsylvania Supreme Court upheld a $1.7 million judgment against General Nutrition Centers (“GNC”) in favor of a class of former store managers who had alleged they were shorted on overtime pay. GNC had used the FLSA’s FWW method, which allows employers to pay employees whose hours fluctuate from week to week a salary that is intended to compensate them for all of the hours worked each week. If the employees work more than 40 hours in a week, then the designated salary is divided by the total number of hours worked that week to calculate the “regular rate,” which is then divided in half and multiplied by the number of overtime hours to compensate the employees for the additional overtime pay due.

Okay, enough math for this blog—basically, the FWW method allows employers to pay overtime at a “half-time” rate because the underlying salary pays for all straight time due for the hours worked. (Note for math geeks: the FWW method causes employees to see a lower effective hourly rate and overtime rate as they work more hours.) This “half-time” method of paying overtime pay conflicts with the Pennsylvania Minimum Wage Act’s requirement that overtime compensation be 1.5 times the regular rate of pay—at least that’s what the state supreme court found.

So, as a side note for Pennsylvania employers, there’s no need to concern yourselves with the brand-new proposed rule on the FWW method issued earlier this month by the U.S. Department of Labor.

Our “simple” advice moving forward: Don’t use the FWW method for employees in Pennsylvania.

Shocker!? Scary New California Employment Laws – Coming to You January 1!

Caroline Powell Donelan and Taylor C. Morosco

California Governor Gavin Newsom went on a bill-signing frenzy earlier this month, enacting 17 new bills into law. Below, we highlight the “Big Five” which will have a certain and critical impact on any business with workers in the Golden State.

AB 51 – Prohibiting Mandatory Arbitration. California’s battle against arbitration wages on! For agreements “entered into, modified, or extended” on or after January 1, 2020, AB 51  prohibits employers from requiring current employees or applicants to “waive any right, forum, or procedure for a violation” of the Fair Employment and Housing Act or the California Labor Code. This necessarily means that an employer will not be permitted to require applicants or employees to consent to mandatory arbitration as a condition of employment. Notably, employees may still voluntarily consent to arbitration, and AB 51 does not apply to “postdispute” settlement agreements or “negotiated” severance agreements, terms that beg for clarification. AB 51 prohibits retaliation against individuals who refuse to consent to such agreements and even authorizes injunctive relief and attorneys’ fees to any plaintiff who proves a violation. There is no doubt that this bill will be challenged under the Federal Arbitration Act (“FAA”), which preempts any state law that “stands as an obstacle” to enforcing arbitration agreements. While the bill contemplates and tries to avoid preemption by expressly stating it is not “intended to invalidate a written arbitration agreement that is otherwise enforceable under the [FAA],” similar attempts by the state have been rejected. Continue reading “Shocker!? Scary New California Employment Laws – Coming to You January 1!”

California Passes AB 5: The Lawful Use of Independent Contractors in California is Drastically Limited

Caroline Powell Donelan and Caitlin I. Sanders

Just last year, the California Supreme Court in Dynamex Operations West v. Superior Court (2018) 4 Cal. 5th 903 (“Dynamex”) abruptly replaced the longstanding test in California for determining whether a worker is an independent contractor (versus an employee) with a more stringent “ABC” test for purposes of the California Industrial Welfare Commission (“IWC”) Wage Orders.

Under the “ABC” test, a worker is presumed to be an employee unless the hiring entity can prove that the worker is (A) free from control; (B) providing services unrelated to the hiring entity’s business; and (C) holding him or herself out as an independent business. More on the landmark decision in Dynamex can be found here.

Last week, California Governor Newsom signed into law Assembly Bill (“AB”) 5, which codifies and expands the “ABC” test set forth in Dynamex, making it even more difficult for employers to properly classify workers as independent contractors in California.

What are the basic provisions of AB 5? Continue reading “California Passes AB 5: The Lawful Use of Independent Contractors in California is Drastically Limited”

Once in a Lifetime? Rare Battle Won for Golden State Employers—but the PAGA War Rages On

Caroline Powell Donelan and Taylor C. Morosco

While talking heads focused on the debates heating up in Houston last week, the California Supreme Court on Thursday put an end to a nearly five-year debate regarding the permissible scope of recovery and arbitrability under California’s Private Attorneys General Act (“PAGA”), a statute that has left employers in the Golden State scratching their heads for over a decade.

On September 12, 2019, California’s highest court held that “underpaid wages” are not recoverable under PAGA. The decision, ZB, N.A. v. Superior Court (“Lawson”), marks big changes in the wild-west of PAGA litigation, yet many key questions remain unanswered.

You May Ask Yourself, Well, How Did I Get Here?

Ahh, PAGA. Where to begin? For the last 15 years, PAGA has allowed private citizens to step into the shoes of the Labor Commissioner, essentially turning “aggrieved” employees into bounty-hunters for the State’s Labor and Workforce Development Agency (“LWDA”). Specifically, PAGA litigants are authorized to recover civil penalties on behalf of the State for certain Labor Code violations, which would otherwise be recoverable only by the Labor Commissioner. If successful, employees receive a 25 percent share of civil penalties recovered, with the remaining 75 percent going to the LWDA. And one other thing, PAGA allows for the recovery of attorneys’ fees and costs, which are often exponentially larger than the underlying civil penalties and statutory damages recovered—leaving no surprise as to why PAGA has become such a popular vehicle for plaintiffs’ attorneys. Continue reading “Once in a Lifetime? Rare Battle Won for Golden State Employers—but the PAGA War Rages On”

New York Expands Workplace Protections for Religious Attire, Clothing, and Facial Hair

Mara B. Levin, Anthony A. Mingione, Stephen E. Tisman, and Jacob W.E. Kearney

A new amendment to the New York State Human Rights Law expressly prohibits workplace discrimination based on religious attire, clothing, and facial hair. New York employers should review their current policies and work with counsel to ensure compliance by the October 8, 2019, effective date.

Governor Cuomo recently signed legislation (S.4037/A.4204) that amends the New York State Human Rights Law to expand religious protections for employees and applicants in the workplace. The New York State Human Rights Law already prohibits employers from imposing upon employees and applicants “a condition of obtaining or retaining employment” that would require them “to violate or forego a sincerely held practice of [their] religion.” N.Y. Exec. Law § 296(10)(a). The new law ensures that those same protections now encompass an employee’s or applicant’s religious attire, clothing, and facial hair. Continue reading “New York Expands Workplace Protections for Religious Attire, Clothing, and Facial Hair”

Hiring in New Jersey? Salary History Ban Sprouts in Garden State

Thomas J. Szymanski

Effective January 1, 2020, private employers in New Jersey are prohibited from asking job applicants about their salary, wage, and benefit history and are not permitted to make hiring decisions based on that information. Employers will also be prohibited from requiring that an applicant’s salary history satisfy certain minimum or maximum requirements.

There are notable exceptions to this prohibition, which include the following:

      1. If an applicant “voluntarily, without employer prompting or coercion,” discloses salary or wage information, the employer may verify whether the information was accurate and use the information to determine compensation to be paid to the applicant;
      2. An employee is applying for internal transfer or promotion with a current employer;
      3. Actions taken by an employer pursuant to a federal law or regulation that expressly requires the disclosure or verification of salary history for employment purposes; and
      4. After an offer of employment has been made that includes an explanation of the overall compensation package, an employer may confirm an applicant’s salary history upon the applicant’s written authorization.

Employers who violate the law can be fined up to $1,000 for a first offense, $5,000 for a second offense, and $10,000 for violations thereafter.

Please contact a member of Blank Rome’s Labor & Employment practice group if you have any questions about compliance with New Jersey’s salary and wage ban or any other employment issues.

New Maryland Law Prohibits Non-Compete Agreements for Lower Wage Workers

Daniel L. Morgan

If you’re an employer in Maryland, beginning October 1, 2019, you are prohibited from requiring a low wage worker (defined as someone earning less than $15/hour or less than $31,200/year) to sign a non-compete agreement with your company. Maryland’s law follows a national trend in which a number of other states have either passed or are considering similar legislation. Among those states that have already passed legislation preventing employers from enforcing non-compete agreements with lower paid employees are Illinois, Maine, and New Hampshire.

As a cautionary note, Maryland’s new law does not grandfather existing non-compete agreements with employees whose earnings bring them within the purview of the new law, which means that those agreements will become unenforceable after the law takes effect. Continue reading “New Maryland Law Prohibits Non-Compete Agreements for Lower Wage Workers”

New York Closes in on Comprehensive Employee Wage Lien Law

Mara B. Levin, Anthony A. Mingione, and Stephen E. Tisman

New York is on the precipice of passing a law that would allow employees to easily file liens against an employer’s property in connection with pending wage disputes. The bill also would permit employee access to certain sensitive employer records and expand the scope of personal liability for owners in disputes over wages. Employers should monitor these developments and work with counsel to prepare an action plan should this bill become law.

The New York State Legislature has recently passed a bill that could substantially alter the legal landscape of wage disputes if signed into law by Governor Cuomo. The proposed Employee Wage Lien bill would allow employees to obtain liens against an employer’s real property and personal property based on allegations involving nonpayment of wages. If signed into law, the bill will become effective within 30 days. Similar laws have been enacted on other states.

The law will allow employees to file a notice of a lien up to three years following the end of the employment giving rise to the wage claim. Employees will be able to place liens up to the total amount allegedly owed based on claims relating to overtime compensation, minimum wage, spread of hours pay, call-in pay, uniform maintenance, unlawful wage deductions, improper meal or tip credits or withheld gratuities, unpaid compensation due under an employment contract, or a claim that the employer violated an existing wage order. In addition, the State Attorney General and Department of Labor will be able to obtain a lien on behalf of an individual employee—or a class of employees—against an employer that is the subject of an investigation, court proceeding, or agency action.

Please click here for the full client alert. 

Have Employers Taken Home the Iron Throne with Lamps Plus?

Caroline Powell Donelan and Taylor C. Morosco

On April 24, 2019, the U.S. Supreme Court issued its 5–4 opinion in Lamps Plus, Inc., et al. v. Varela holding that class arbitration is only allowed when the parties’ agreement explicitly allows for it. In other words, when an arbitration agreement is silent or even ambiguous as to whether class-wide proceedings are allowed, claims must be arbitrated on an individual basis.

Lamps Plus is the latest decision from our highest court bolstering the enforceability of individual arbitration in the workplace.

In this post, we’ll take a semi-deep dive into Lamps Plus and evaluate potential implications for your workplace as well as for future litigation strategies. Continue reading “Have Employers Taken Home the Iron Throne with Lamps Plus?”