“C” Is for Consent When It Comes to Arbitration in California: U.S. Supreme Court Holds that Representative Action Waivers Are Enforceable to Compel “Individual” PAGA Claims to Arbitration

Caroline Powell Donelan and Caitlin I. Sanders ●

Last week, the United States Supreme Court issued its long-awaited decision in Viking River Cruises, Inc. v. Moriana (US 20–1573 6/15/22) (“Moriana”). The singular question presented to the Court was whether the Federal Arbitration Act (“FAA”) requires enforcement of arbitration agreements waiving an employee’s right to assert “representative” claims under California’s Private Attorneys General Act (“PAGA”). In response, the Court provided two answers: (1) wholesale waivers of an employee’s right to bring any PAGA claims in any forum will not be enforced; yet (2) arbitration agreements can require an employee to arbitrate their own individual PAGA claims, leaving the absent employees’ claims subject to dismissal.

For context, PAGA is a decades-old law that allows 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 another 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.

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IRS Pilot Program Gives Employers Heads-Up on Retirement Plan Audits

Daniel L. Morgan 

The Internal Revenue Service (“IRS”) has announced a pilot program that begins this month in which they will send letters to employers letting them know that their retirement plan has been selected for examination.

Under this new program, employers who receive the pre-examination notice will have a 90-day window to review their retirement plan’s documents and operations to see if they meet tax law requirements and notify the IRS. Employers who don’t respond within 90 days will be contacted by the IRS to schedule an examination.

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Employer Alert: California Puts Another “Premium” on Meal Period Compliance

Caroline Powell Donelan and Howard M. Knee

California is infamous for its hostility towards employers. On May 23, the California Supreme Court continued on its unwavering mission to solidify that well-earned reputation by issuing a 45-page decision in Naranjo et al. v. Spectrum Security Services, Inc., a case we have been closely monitoring at Blank Rome.

For context, the failure to pay wages in California triggers not only an award of those unpaid wages, but potentially steep and costly statutory and civil penalties as well, including so-called: (1) “waiting time penalties”—up to 30 days’ wages for former employees; and (2) “wage statement penalties” when the unpaid wages render the employee’s pay stub inaccurate. Wage statement penalties start at $50 for the first violation and rise to $100 for subsequent violations. When claims are brought on a classwide basis, these penalties can become astronomical, as they are all assessed on a per-employee, per-pay-period basis.

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Paid Family Leave Is Coming to Delaware

Julia C. Riskowitz

On May 10, 2022, Governor John Carney signed into law the Healthy Delaware Families Act, which will make Delaware the 11th state in the country to offer paid family leave when the law goes into effect. Starting in 2026, the new law will guarantee 12 weeks of paid parental leave and six weeks of paid medical, caregiving, and military leave to qualified employees through a new state-run paid family and medical leave social insurance program.

Under the law, eligible workers will continue to receive up to 80 percent of their average weekly wage, up to a maximum of $900 a week in 2026 and 2027, while out on a qualified leave. Like the federal Family and Medical Leave Act, the Delaware paid leave law only applies to employees who have worked at least 1,250 hours in the prior 12 months and were employed by the company for a full 12 months prior to taking paid leave.

Employees who work at companies with more than 25 employees will be eligible for the paid parental, medical, military, and caregiver leave. Employees at smaller companies, those who employ between 10 and 24 employees, will be eligible for the 12 weeks of paid parental leave only. Companies who employ fewer than 10 employees are not required to participate in the paid leave program but can voluntarily join the program. Additionally, the law permits businesses to opt out of the social insurance program, if they have an established paid leave program that offers comparable benefits.

The paid leave benefits will be funded by a new 0.8 percent payroll tax on employers beginning in 2025. This 0.8 percent payroll tax is broken down as follows: 0.4 percent for personal medical leave, 0.32 percent for parental leave, and 0.08 percent for caregiver and military leave. Employers can pay the full payroll tax themselves or can deduct up to half of the tax contribution from each covered employee’s paycheck. For example, the full payroll tax for $1,000,000 of annual payroll would be $8,000. If an employer chooses to split the paid leave payroll tax with its employees, an employee earning $50,000 a year will pay $200 per year into the social insurance program.

New York City Clarifies Pay Transparency Timetable—Delays Effective Date

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

As previewed in our April 5, 2022, client alert (New York Employers, Take Note! Two New Laws Effective in May | Blank Rome LLP), New York City has rolled back to November 1, 2022, the effective date of its amendment to the New York City Human Rights Law (“NYCHRL”) that will require the City’s private employers to provide a minimum and maximum salary range for jobs when advertising employment opportunities.

The City delayed the effective date in order to give employers a six-month extension of time to come into compliance. The amendment will require employers that are advertising job openings for positions performed in New York City to include the salary range (both a minimum and maximum amount) being offered for the position in the advertisement.

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New York Employers, Take Note! Two New Laws Effective in May

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

New York businesses face not one, but two new laws which significantly impact employers and take effect next month. The first requires employers in New York City to provide salary ranges when advertising employment opportunities (effective May 15, 2022). The second mandates that New York employers provide prior notice and posting if they intend to monitor employee telephone, e-mail, or Internet usage (effective May 7, 2022). Read below for important summaries of the new laws and their impact on your business.

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Philadelphia City Council Passes Ordinance Requiring Paid Leave for COVID-19 Leave

Rebecca J. Reist

On March 3, 2022, the Philadelphia City Council passed an ordinance amending the City’s Public Health Emergency Leave Law that requires many Philadelphia employers to provide their employees with paid leave for absences related to COVID-19. Mayor Jim Kenney signed the bill on March 9, 2022, and it went into effect immediately after signing. The ordinance provides that employees may use this new paid COVID-19 leave for their inability to work based on one or more of the following reasons:

      • the employee’s presence on the job or in the community would jeopardize the health of others because of the employee’s exposure to COVID-19, or because the employee is exhibiting symptoms, regardless of whether the employee has been diagnosed with or has tested positive for COVID-19;
      • to care for a family member who has been exposed to COVID-19 or who exhibits symptoms that may jeopardize the health of others, regardless of whether the family member has been diagnosed or having tested positive for COVID-19;
      • to self-isolate because the employee was diagnosed or tested positive for COVID-19, because the employee is experiencing symptoms of COVID-19, or to seek medical care if experiencing symptoms of an illness related to COVID-19;
      • to care for a family member who is self-isolating because the family member was diagnosed or tested positive for COVID-19, because the family member is experiencing symptoms of COVID-19, or to seek medical care if experiencing symptoms of an illness related to COVID-19;
      • to care for a child if their school has been closed or their childcare provider is unavailable due to precautions taken in response to COVID-19;
      • to obtain a COVID-19 vaccination or booster; or
      • to recover from any side effect related to a COVID-19 vaccination.
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Congress Passes Bipartisan Legislation Prohibiting Mandatory Arbitration of Sexual Harassment Claims

Alix L. Udelson

President Biden is expected to soon sign into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “Act”), which was recently passed by both houses of Congress. President Biden has long supported measures to limit mandatory arbitration clauses in general and specifically endorsed the Act, which received bipartisan support.

The Act will amend the Federal Arbitration Act to limit every employer’s ability to mandate predispute arbitration of an employee’s claims of sexual harassment or sexual assault. The salient language provides:

Notwithstanding any other provision of this title, at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct, no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.

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Blank Rome’s Jason E. Reisman and Justin A. Chiarodo Named BTI 2022 Client Service All-Stars

Blank Rome LLP is pleased to announce that Jason E. Reisman (left), partner and co-chair of the firm’s Labor & Employment practice group, and Justin A. Chiarodo (right), partner and chair of the firm’s Government Contracts practice group, have been named BTI 2022 Client Service All-Stars. 

This annual survey conducted by BTI Consulting Group is the “gold standard” used by corporate counsel and law firms alike to identify leading attorneys who “stand above all the others in delivering the absolutely best in client service.” The honorees hail from over 15 industry segments and are notably recognized for being practical, savvy, “in the know,” able to deal with complexity, available, and nimble, as defined by BTI’s definition of a Client Service All-Star. For more information, please visit BTI Client Service All-Stars.

To read Jason’s and Justin’s BTI profiles, as published in BTI’s 2022 Client Service All-Stars, please visit our website.

As Restrictions Are Lifted across the Country, California Reinstates Supplemental Paid Sick Leave for COVID-19

Caitlin I. Sanders and Alix L. Udelson

On February 9, 2022, California Governor Newsom signed into law Senate Bill (“SB”) 114.

The law reinstates the COVID-19 supplemental paid sick leave (“CSPSL”) requirement for companies with more than 26 employees. Like California’s prior CSPSL iteration, which expired on September 30, 2021, the new law provides up to 80 hours of CSPSL for full-time employees for certain COVID-19-related reasons. The law takes effect immediately, but the obligation to provide CSPSL does not begin until February 19, 2022. The law is currently set to remain in effect through September 30, 2022.

Here are the pertinent details that employers need to know:

Covered Employers: SB 114 covers all employers in California with more than 25 employees. Employers with 25 or fewer employees are not covered.

Covered Employees: SB 114 covers employees who are unable to work or telework due to any of the reasons that qualify for CSPSL (detailed below).

Amount of Leave: Full-time employees are entitled to up to 80 hours of CSPSL for qualifying reasons. Part-time employees are provided a prorated amount of this benefit. This leave is in addition to regular paid sick leave already required under California law.

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