Welcome to the Weintraub Resources section. Here, you can find our Blogs, Videos, and Podcasts, in which Weintraub attorneys regularly provide insights and updates on legal developments. You can also find upcoming Weintraub Events, as well as firm and client News.


Which California Employment-Related Bills Were Signed Into Law And Which Ones Did Not Make The Cut?

Well September 30, 2018 has come and gone.  As my September 19, 2018 article indicated, that was the deadline for Governor Brown to either sign or veto a large number of employment-related bills passed by the California Legislature during the 2017-2018 Term.  Out of the 21 employment-related bills I summarized in my September 19th article, 12 were signed into law, and 9 were vetoed.  Below is a list of the new laws California employers must comply with, as well as a list of vetoed bills where employers dodged the bullet.

To read the full article, please click here

Bills Signed into Law.

  1. SB820. Prohibition on Non-Disclosure Provisions re: Sexual Misconduct & Harassment.
  2. AB3109. Right to Testify re: Sexual Misconduct.
  3. SB1300. Significant Revisions and Additions to FEHA; Prohibiting Certain Release and Non-Disparagement Provisions re: FEHA Claims; Expanding Employer’s Liability for Harassment by Third-Parties; Authorizing Bystander Training; and Outlining Legislative Declarations re: Litigating Sexual Harassment Claims.
  4. SB1343. Expansion of Training Requirements re: Sexual Harassment.
  5. AB2338. Sexual Harassment Training Requirements for Talent Agencies.
  6. AB1976. Acceptable Lactation Locations for Employees.
  7. SB970. Required Training of Hotel and Motel Employees re: Human Trafficking.
  8. AB2034. Required Training of Mass Transit Employees re: Human Trafficking.
  9. SB224. Sexual Harassment in the Professional Relationship.
  10. SB1123. Expansion of PFL Wage Replacement Benefits.
  11. SB1412. Clarifications on “Ban the Box” Law re: Criminal History Inquiries of Particular Convictions.
  12. SB826. Females on Board of Directors of Publicly Held Corporations.

Vetoed Bills.

  1. AB3080. [Prohibition on Non-Disclosures re: Sexual Harassment & Prohibition on Mandatory Arbitration Agreements re: FEHA claims].
  2. AB1867. [Records of Sexual Harassment Complaints].
  3. AB1870. [Extension of FEHA Statute of Limitations].
  4. AB3081. [Rebuttable Presumption of Retaliation against Sexual Harassment Complainant].
  5. AB2079. [Sexual Harassment Trainer Qualifications for Janitorial Workers].
  6. SB937. [Acceptable Lactation Locations for Employees].
  7. SB1223. [Harassment & Discrimination Prevention Policy & Training in Construction Industry].
  8. AB2496. [Rebuttable Presumption of Employment Status for Janitorial Workers].
  9. AB2732. [Immigration Documents & “Workers Bill of Rights

Takeaway:  California employers should evaluate the new employment laws discussed above as well as others that were passed, and take necessary steps to ensure compliance. The employment attorneys at Weintraub Tobin are happy to discuss the new laws and assist employers in complying with their legal obligations.

To Be or Not to Be [a New Law]? Countdown on Governor Brown’s Review of California Employment-Related Bills

The September 30th deadline for Governor Brown to act on numerous employment-related bills passed by the California Legislature during the 2017-2018 Legislative Term is fast approaching. This Blog summarizes only 21 of the more than 40 employment-related bills currently on the Governor’s desk. Employers are encouraged to stay tuned to see which bills become law and which ones don’t make the cut.  NOTE: employment laws are constantly changing and employers must ensure that they make the necessary changes to policies and practices so that they are in compliance with current legal requirements.

  1. SB820. [Prohibition on Non-Disclosure Provisions re: Sexual Misconduct & Harassment].
  2. AB3080. [Prohibition on Non-Disclosures re: Sexual Harassment & Prohibition on Mandatory Arbitration Agreements re: FEHA claims].
  3. AB3109. [Right to Testify re: Sexual Misconduct].
  4. AB1867. [Records of Sexual Harassment Complaints].
  5. AB1870. [Extension of FEHA Statute of Limitations].
  6. SB1300. [Prohibition re: Release of Claims & Non-Disparagements re: Sexual Harassment].
  7. SB1343. [Expansion of Training Requirements re: Sexual Harassment].
  8. AB3081. [Rebuttable Presumption of Retaliation against Sexual Harassment Complainant].
  9. AB2079. [Sexual Harassment Trainer Qualifications for Janitorial Workers].
  10. AB2338. [Sexual Harassment Training Requirements for Talent Agencies].
  11. AB1976. [Acceptable Lactation Locations for Employees].
  12. SB937. [Acceptable Lactation Locations for Employees].
  13. SB970. [Required Training of Hotel and Motel Employees re: Human Trafficking].
  14. AB2034. [Required Training of Mass Transit Employees re: Human Trafficking].
  15. SB224. [Sexual Harassment in the Professional Relationship].
  16. SB1223. [Harassment & Discrimination Prevention Policy & Training in Construction Industry].
  17. AB2496. [Rebuttable Presumption of Employment Status for Janitorial Workers].
  18. AB2732. [Immigration Documents & “Workers Bill of Rights”].
  19. SB1123. [Expansion of PFL Wage Replacement Benefits].
  20. SB1412. [Clarifications on “Ban the Box” Law re: Criminal History Inquiries of Particular Convictions].
  21. SB826. [Females on Board of Directors of Publicly Held Corporations].

To read the full article and summaries of each bill, please click here.

Good News Employers – There are Now Some Answers to Your Questions About the Recent Law Prohibiting Use of Prior Salary History

On July 18, 2018, Governor Brown signed Assembly Bill (AB) 2282 which provides answers and clarifications to a number of questions employers had about the new law that went into effect in January 2018 (Assembly Bill 168 – codified in Labor Code section 432.3). Section 432.3 prohibits employers from relying on the salary history information of an applicant for employment as a factor in determining whether to offer an applicant employment or what salary to offer an applicant, and also requires an employer, upon reasonable request, to provide the pay scale for a position to an applicant applying for employment.

Since its enactment, employers were questioning the scope of the restrictions contained in Section 432.3, and their obligations in connection with disclosing pay scale information upon request. In order to answer some of those questions, AB 2282 does the following:

1. It clarifies that the prohibitions under Section 432.3 do not apply when evaluating the salary of a current employee (e.g. if internal applications or employee promotions are being considered). Specifically, AB 2282 provides that: “For purposes of this section, the term “applicant” or “applicant for employment” means an individual who is seeking employment with the employer and is not currently employed with that employer in any capacity or position.”

2. In connection with an applicant’s right to seek the pay scale for a position upon reasonable request, AB 2282 defines the two terms as follows:

“For purposes of this section, “pay scale” means a salary or hourly wage range.”

– “For purposes of this section “reasonable request” means a request made after an applicant has completed an initial interview with the employer.”

Based on these definitions, employers now only have to provide a range of what the salary or hourly wage would be for a position rather than some fixed or guaranteed pay scale. Further, employers only have to provide this information to an applicant once he or she has completed an initial interview with the employer.

3. Finally, Section 432.3 already provides that nothing in the section prohibits an applicant from voluntarily and without prompting disclosing salary history information to a prospective employer. However, the law was silent on whether an employer could ask an applicant about his or her salary expectations.

AB 2282 clarified that the law does not prohibit an employer from asking an applicant for his or her salary expectations. Specifically, AB 2282 states: “Nothing in this section shall prohibit an employer from asking an applicant about his or her salary expectation for the position being applied for.”

Takeaway: While AB 2282 provided some much needed clarification to the new law, employers must still be sure that anyone involved in the hiring process is aware of the restrictions contained in Section 432.3 in connection with an applicant’s prior salary history. The employment attorneys at Weintraub Tobin regularly counsel employers in all areas of employment law compliance, including wage and hour and equal pay issues. Feel free to contact us if we can be of assistance.

California Law Now Provides an Express Statutory Privilege Against Defamation Claims by Those Accused of Sexual Harassment

Under California law, an aggrieved person can bring a claim for defamation if the person is the subject of a false and unprivileged statement that is injurious to his/her reputation. Defamation can take the form of libel or slander. (Ca. Civ. Code Sec. 44.) Specifically “libel” is defined as a false and unprivileged publication by writing, printing, picture, effigy, or other fixed representation to the eye, which exposes any person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation. (Ca. Civ. Code Sec. 45.). Whereas, “slander” is defined as a false and unprivileged publication, orally uttered, and also communications by radio or any mechanical or other means which: (a) charges any person with crime, or with having been indicted, convicted, or punished for crime; (b) imputes in him the present existence of an infectious, contagious, or loathsome disease; (c) tends directly to injure him in respect to his office, profession, trade or business, either by imputing to him general disqualification in those respects which the office or other occupation peculiarly requires, or by imputing something with reference to his office, profession, trade, or business that has a natural tendency to lessen its profits; (d) imputes to him impotence or a want of chastity; or (e) which, by natural consequence, causes actual damage. (Ca. Civ. Code Sec. 46.)

In recent years, a number of defamation lawsuits have been filed by individuals who have been accused of sexual harassment in the workplace in which the individuals claim that the accusations are false and injurious to their reputations. The concern of the California Legislature was that these defamation claims were having a chilling effect on victims of sexual harassment who may be afraid to come forward with their complaints. In response to the #MeToo and #WeSaidEnough movements demanding action to address the ongoing prevalence of sexual harassment, the California Senate Judiciary Committee, in conjunction with the Senate Select Committee on Women, Work and Families, held informational hearings in early 2018. In addition to reexamining the legal standards for sexual harassment in California, the hearings also addressed the issue of defamation claims being filed against victims of sexual harassment, and/or against employers and other witnesses involved in a sexual harassment investigation. As a result, legislation was introduced to modify defamation laws to help mitigate against this chilling effect.

On July 9, 2018, Governor Brown signed Assembly Bill (AB) 2770 which amends California Civil Code section 47 (re: privileged communications). The Senate Judiciary Committee’s June 16, 2018 analysis of the bill explains that AB 2770 codifies California defamation case law as it relates to allegations of workplace sexual harassment. Thus, the bill amends Civil Code section 47 to expressly provide that: (1) employees who report sexual harassment to their employer are not liable for any resulting injury to the alleged harasser’s reputation, so long as the communication is made based on credible evidence and without malice; (2) communications between employers and anyone with an interest in a sexual harassment complaint, such as victims and witnesses, are not liable for any resulting damage to the alleged harassers reputation, as long as the communication is made without malice; and (3) former employers are not liable for any resulting injury to a former employee’s reputation if, in response to inquiries from prospective employers, the former employers indicate that they would not rehire the former employee based on a determination that the former employee engaged in sexual harassment, so long as the statement is made without malice.

For purposes of defamation law, “malice” is defined as a defamatory publication that is either motivated by hatred or ill will towards the plaintiff, or where the defendant lacked reasonable grounds for believing the truth of the publication and therefore acted in reckless disregard of the plaintiff’s rights. (Schep v. Capitol One N.A. (2017) 12 Cal.App.5th 1331; Taus v. Loftus (2007) 40 Cal 4th 683; see also California Civil Instructions (CACI) 1723).)

This change in the law will become effective January 1, 2019.

NLRB Provides Guidance Regarding Permissible Policies – Are Your Policies Compliant?

Back in December, Beth West informed our readers that the NLRB had issued new (and more realistic) guidelines for evaluating whether employment policies and rules violate the National Labor Relations Act (“NLRA”). As a reminder, the NLRB issued a new two-prong test for determining if facially neutral employment policies could interfere with the exercise of NLRA rights, evaluating: (1) the nature and extent of the potential impact on NLRA rights, and (2) the legitimate justifications associated with the rule.

The National Labor Relations Board’s General Counsel recently issued a memorandum (the “Memo”) providing guidance as to how the NLRB will enforce workplace policies, in light of that decision. The Memo evaluates common workplace rules to assess whether or not such rules may be permissible, evaluating the rules under three main categories: (1) lawful to maintain; (2) warrant individualized scrutiny; and (3) unlawful to maintain.

Category 1: Rules that are Generally Lawful to Maintain.

According to the Memo, the “types of rules in this category are generally lawful, either because the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of rights guaranteed by the Act, or because the potential adverse impact on protected rights is outweighed by the business justifications associated with the rule.” The following rules were identified as being “generally lawful to maintain”:

*Civility Rules

*No-photography/No-recording Rules

*Rules against insubordination, non-competition, or on-the-job conduct that adversely affects operations

*Disruptive Behavior Rules

*Rules protecting confidential, proprietary, and customer information or documents

*Rules against defamation or misrepresentation

*Rules against using employer logos or intellectual property

*Rules requiring authorization to speak on the employer’s behalf

*Rules banning disloyalty, nepotism, or self-enrichment

Category 2: Rules that Warrant Individualized Scrutiny.

Category 2 rules are explained as rules that “are not obviously lawful or unlawful, and must be evaluated on a case-by-case basis to determine whether the rule would interfere with rights guaranteed by the NLRA, and if so, whether any adverse impact on those rights is outweighed by legitimate justifications.” It lists possible examples of Category 2 rules to be:

*Broad conflict of interest rules that do not specifically target fraud and self-enrichment and do not restrict membership in, or voting for, a union

*Confidentiality rules referring to “employer business” or “employer information” (as opposed to prohibiting use of customer or proprietary information

*Rules relating to an employee’s use of the employer’s name (as opposed to use of the employer’s logo/trademark)

*Rules generally restricting an employee’s ability to generally speak to the media or third parties (as opposed to prohibiting speaking on behalf of the employer)

*Rules banning off-duty conduct that might harm the employer (as opposed to activity that causes a disruption in the workplace)

*Rules against making false or inaccurate statements (as opposed to defamatory statements)

Category 3: Rules that are Unlawful to Maintain.

The Memo states that “Rules in this category are generally unlawful because they would prohibit or limit NLRA-protected conduct, and the adverse impact on the rights guaranteed by the NLRA outweighs any justifications associated with the rule.” It specifically notes that (1) confidentiality rules specifically regarding wages, benefits, or working conditions; or (2) rules against joining outside organizations or voting on matters concerning the employer are prohibited.

Employers should review their employment policies to ensure compliance with this updated guidance. Weintraub’s Labor & Employment attorneys have extensive experience counseling and auditing employee handbooks. Please contact any member of our team for assistance in updating your policies.

Do You Own a Hotel? – New Regulations Going Into Effect

In January, the Cal/OSHA Standards Board (OSHSB) adopted new regulations intended to prevent and reduce workplace injuries suffered by housekeepers in the hotel and hospitality industry. The new regulations, which go into effect on July 1st, require California hotel (and other lodging) employers to adopt a Musculoskeletal Injury Prevention Program (MIPP) to complement the Injury and Illness Prevention Plan (IIPP), which should already be in place. The MIPP must include:

*Procedures to identify and evaluate housekeeping hazards through worksite evaluations.

*Procedures to investigate musculoskeletal injuries.

*Methods to correct identified hazards.

*Training of employees and supervisors on safe practices and controls (both, upon hire and annually thereafter).

*Record retention and a process for reporting injuries to the employer.

If you need help drafting a compliant MIPP, the attorneys in Weintraub Tobin’s Labor and Employment Group are happy to assist you. Contact any one of us for help.

New California Regulations on National Origin Going Into Effect

As any reader of our blog knows, California employers are prohibited from discriminating on the basis of national origin (among other classifications). The Fair Employment and Housing Commission (“FEHC”) recently issued new regulations, which go into effect on July 1, 2018, expanding the definition of “national origin” to include an individual’s or ancestors’ actual or perceived (1) physical, cultural, or linguistic characteristics associated with a national origin group; (2) marriage to persons of a national origin group; (3) tribal affiliation; (4) membership in an organization identified with or seeking to promote the interests of a national origin group; (5) attendance in schools or religious institutions typically used by persons of a national origin group; and (6) name associated with a national origin group. The regulations also provide that “national origin groups” include “ethnic groups, geographic places of origin, and countries that are not presently in existence.”

These new regulations further specify the following:

1. Employers may not have an “English-only rule” unless they are able to demonstrate the following three elements: (1) that the rule is a business necessity; (2) that the rule is narrowly tailored; and (3) that the rule was effectively explained to employees. In order to be considered a “business necessity,” the employer must establish: (1) that the language restriction is necessary to the safe and efficient operation of the business; (2) that the language restriction effectively fulfills the business purpose it is supposed to serve; and (3) that there is no alternative practice to the language restriction that would accomplish the business purpose equally well with a lesser discriminatory impact. Further, while the FEHC clearly establishes that some English-only rules may be permissible, it clarifies that such rules “are never lawful during an employee’s non-work time.” This means that English-only rules are never permissible during meal or rest breaks, or other unpaid employer-sponsored events.

2. Employers may not question an employee’s immigration status “unless the person seeking discovery or making the inquiry has shown by clear and convincing evidence that such inquiry is necessary to comply with federal immigration law.”

3. Employers may not have height and weight requirements that disparately impact a certain national origin group. Where an employee is able to show that a height and/or weight requirement does adversely impact a particular national origin, the requirement will be considered unlawful unless the employer can establish the requirement is job related and justified by business necessity, and its purpose cannot be achieved through other means.

If you employ more than five employees in California, you should review your employment policies to ensure compliance with these new regulations. Specifically, employers should ensure that any English-only language restrictions, and or height and weight requirements, comply with these new regulations, and are supported by legitimate business needs.

Still have questions? The attorneys in Weintraub Tobin’s Labor and Employment Group assist employers in all areas of employment law compliance. Contact any one of us if we can be of assistance.

San Francisco’s New Rules for Enforcing its Paid Sick Leave Ordinance

On May 7, 2018, the San Francisco Office of Labor Standards Enforcement (OLSE) published 14 new rules for interpreting the San Francisco Paid Sick Leave Ordinance (“PSLO”). The PSLO was amended on January 1, 2017.  The new rules take effect on June 7, 2018.

We’ve summarized the 5 rules that our clients most frequently ask about:

Rule 1 – Employee Notification of Need for Leave

The rule clarifies that employers may establish policies or procedures dictating how employees need to give notice of a need for leave.

1.1:  Policies requiring advance notice for pre-scheduled absences (like a doctor’s appointment) are generally presumed reasonable.  But, rules requiring excessive amounts of time for advance notice, or especially burdensome methods of communicating the notice, might not be reasonable.

1.2:  Policies requiring notice “as soon as practicable” for an unforeseeable absence will be presumed reasonable. But, policies requiring more than two (2) hours’ notice for an unscheduled absence are not reasonable.  Employers may define “as soon as practicable” as two hours, or less than two hours, prior to the start of an employee’s work shift.  Employers must recognize that there are instances such as accidents or sudden illnesses for which such a requirement is unreasonable.

1.5:  Employers cannot require that employees use magic words (“PSLO” or “paid sick leave”) when giving notice of an absence. If an employee says “I’m out sick” that is all the notice needed.

Takeaway: Employers’ “notice” policies should provide for more than one method of notice if feasible (i.e., call, email or text message to the manager) that allows the employee some flexibility and ease of providing notice.  Employers should also allow someone else to give notice on the employee’s behalf if the employee is incapacitated. Policies should specify that “whenever possible”, employees give up to two hours’ advance notice and note that in an emergency, employees should give notice as soon as practicable.

Rule 2 – Verifying Valid Use of Paid Sick Leave

2.1:  Employers can require verification (such as a doctor’s note) that provides information necessary to confirm that the absence was for a statutory reason (illness, injury, domestic violence, sexual assault, or stalking suffered by the employee, bone marrow/organ donation, etc.)  Employers cannot demand additional information or details (such as for a diagnosis of a specific condition).

2.3-2.5: Employers may only use reasonable methods to verify that an employee did not abuse a paid sick leave policy.  Employers may require a doctor’s note for either (1) verification of a doctor’s appointment if the reason given for the leave was an appointment; or (2) three or more consecutive missed workdays.  Employers cannot require a doctor’s note for less than three consecutive missed days, unless there is a “clear pattern” or instance of abuse.

Takeaway: Make sure your policies do not require a doctor’s note for each instance of paid sick leave of less than three workdays.  Consult with legal counsel before deeming an employee’s use of leave abusive and demanding a doctor’s note.

Rule 5 – Rate of Pay

The PSLO will track the State law in regards to calculating rates of pay and defining “exempt” employees as those exempt from the federal Fair Labor Standards Act and California labor law.

5.3:  If the employee is an exempt employee, and no other forms of paid leave are provided, the employee’s salary shall continue without deduction for sick time taken, with the time taken applied against the employee’s leave balance.

Rule 6 – Work-From-Home and Occasional Workers in San Francisco

6.1:  Employees who live in San Francisco and work from home or telecommute, are covered by the PSLO if they perform 56 or more hours of work in San Francisco in a calendar year.

6.2:  Employees who simply travel through San Francisco (i.e., rivers who drive through San Francisco while working) are not covered unless they actually stop in the City to work (for example, to make pickups or deliveries) and work 56 or more hours in the City in a calendar year.

Rule 7 – Small Business Exemption – Fluctuating Workforce

The ordinance does not apply to employers with fewer than 10 employees. If a small employer’s workforce fluctuates above and below 10, then the OLSE will determine if an employer is covered by taking the average number of employees who worked during the prior calendar year.

For new employers, OLSE will calculate business size for the current calendar year based upon the average number of persons per week who worked for compensation for the first 90 days after its first employee(s) began work.

Takeaway: Small employers should calculate their average employees at the end of each calendar year. If you were above 10 last year, the PLSO covers your employees this year, even if you fall below 10.

The attorneys in Weintraub Tobin’s Labor and Employment Group assist employers in all areas of employment law compliance.  Contact any one of us if we can be of assistance.

GOOD NEWS EMPLOYERS – The U.S. Supreme Court Says You Can Require Class Action Waivers In Your Arbitration Agreements

On May 21, 2018, the United States Supreme Court issued its much anticipated decision in Epic Systems Corp. v. Lewis. In a 5-4 decision written by the newest jurist, Justice Gorsuch, the Court declares that employers can require employees to arbitrate their employment disputes individually and waive their rights to resolve those disputes through class or collective actions.

Background.

The case was a consolidation of three cases (Epic Systems Corp. v. Lewis, Ernst & Young LLP v. Morris, and National Labor Relations Board v. Murphy Oil USA, Inc.). In each case, the employees brought a class action under the federal Fair Labor Standards Act (“FLSA”) and related state law against their employer on behalf of themselves and similarly situated employees for wage and hour violations. However, in each of the cases, the employees had entered into an agreement with their employer providing for individualized arbitration proceedings to resolve employment disputes between the parties. Although the Federal Arbitration Act (“FAA”) generally requires courts to enforce arbitration agreements as written, the employees argued that the FAA’s “savings clause” removes this obligation if an arbitration agreement violates some other federal law and that, by requiring individualized proceedings, the agreements they signed violated the National Labor Relations Act (“NLRA”).

Each of the employers countered that the FAA protects agreements requiring arbitration from judicial interference and that neither the FAA’s saving clause nor the NLRA demands a different conclusion. After a detailed analysis, the U.S. Supreme Court agreed.

Court’s Analysis.

The FAA’s Savings Clause Recognizes Only General Contract Defenses Which the Employees Did Not Raise.

The employees argued that the FAA’s savings clause permits courts to refrain from enforcing arbitration agreements if the agreements violate some other federal law, like the NLRA. However, the Supreme Court held that the FAA’s savings clause —which allows courts to refuse to enforce arbitration agreements “upon such grounds as exist at law or in equity for the revocation of any contract,” recognizes only “‘generally applicable contract defenses, such as fraud, duress, or unconscionability,’” (citing AT&T Mobility LLC v. Concepcion, 563 U. S. 333, 339), not defenses targeting arbitration either by name or by more subtle methods, such as by “interfer[ing] with fundamental attributes of arbitration.” (Id. at 344.) (emphasis added.)

The Court held that “this is where the employees’ argument stumbles” because they didn’t argue that their arbitration agreements were extracted, say, by an act of fraud or duress or in some other unconscionable way that would render any contract unenforceable. Instead, they object to their agreements precisely because they require individualized arbitration proceedings instead of class or collective ones. And by attacking (only) the individualized nature of the arbitration proceedings, the employees’ argument seeks to interfere with one of arbitration’s fundamental attributes.

Section 7 of the NLRA Does Not Encompass the Right to Class or Collective Actions.

The employees also mistakenly claimed that, even if the FAA normally requires enforcement of arbitration agreements like theirs, the NLRA overrides that guidance and renders their agreements unlawful. The employees argued that class and collective actions are “concerted activities” protected by Section 7 of the NLRA, which guarantees employees the right to self-organization, to form, join, or assist labor organizations, to bargain collectively, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection. But the Court pointed out that Section 7 focuses on the right to organize unions and bargain collectively, and “does not mention class or collective action procedures or even hint at a clear and manifest wish to displace the Arbitration Act.”

The Court found that it is unlikely that Congress wished to confer a right to class or collective actions in Section 7, since those procedures were hardly known when the NLRA was adopted in 1935. As the Court pointed out, the Federal Rule of Civil Procedure 23 didn’t create the modern class action until 1966; class arbitration didn’t emerge until later still; and even the Fair Labor Standards Act’s collective action provision postdated Section 7 by years.

The Court rejected the employees’ argument that the catchall term at the end of Section 7 that provides for “other concerted activities for the purpose of . . . other mutual aid or protection” can be read to include class and collective legal actions. The Court concluded that the catchall term should be understood to protect the same kind of things employees “just do” for themselves in the course of exercising their right to free association in the workplace, rather than “the highly regulated, courtroom-bound ‘activities’ of class and joint
litigation.”

The Court went on to point out that the NLRA’s structure underscores the same conclusion. After speaking of various “concerted activities” in Section 7, the NLRA establishes a detailed regulatory regime applicable to each item on the list. It even sets rules for adjudicatory proceedings under the NLRA itself. However, the Court noted that “…missing entirely from this careful regime is any hint about what rules should govern the adjudication of class or collective actions in court or arbitration.”

The Court rejected the employees’ argument that the NLRA does not discuss class and collective action procedures because it means to confer a right to use existing procedures provided by statute or rule. As the Court pointed out, the NLRA does not say even that much. And the Court held that, “…if employees do take existing rules as they find them, they must take them subject to those rules’ inherent limitations, including the principle that parties may depart from them in favor of individualized arbitration.” (emphasis added.)

Individualized Arbitration Agreements are Enforceable under the FLSA.

The Court pointed out that the employees’ underlying claims involve their wages and arise under the FLSA not under the NLRA. The FLSA allows employees to sue on behalf of themselves and other similarly situated employees just as the employees had done in these cases. Yet, as the Court calls out, the employees do not argue that the FLSA overcomes the FAA to permit their class and collective actions, and asks why not? Presumably the Court concludes, because the Court made clear decades ago that “…an identical collective action scheme (in fact, one borrowed from the FLSA) does not displace the Arbitration Act or prohibit individualized arbitration proceedings.” (citing Gilmer v. Interstate/Johnson Lane Corp., 500 U. S. 20, 32 (1991).)

The Court takes real issue with the employees’ attempt to bootstrap the NLRA into a claim that falls squarely within the four corners of the FLSA in order to then try and avoid the dictates of the FAA. It underscores how “[e]very circuit to consider the question” has held that the FLSA allows agreements for individualized arbitration, and goes on to find that “…[f]aced with that obstacle, the employees are left to cast about elsewhere for help. And so they have cast in this direction, suggesting that one statute (the NLRA) steps in to dictate the procedures for claims under a different statute (the FLSA), and thereby overrides the commands of yet a third statute (the Arbitration Act). It’s a sort of interpretive triple bank shot, and just stating the theory is enough to raise a judicial eyebrow.” (emphasis added.)

Holding.

The Court concludes its decision by discussing the many cases it has heard over the years in which it has rejected every attempt to conjure conflicts between the FAA and other federal statutes. In this large body of case law, the Court points out that the following two principles remain true:

1. The Court has made clear that even a statute’s express provision for collective legal actions does not necessarily mean that it precludes individual attempts at conciliation through arbitration.

2. The Court has stressed that the absence of any specific statutory discussion of arbitration or class actions is an important and telling clue that Congress has not displaced the FAA.

The Court ultimately held that Congress has instructed in the FAA that arbitration agreements providing for individualized proceedings must be enforced, and neither the FAA’s savings clause nor the NLRA suggests otherwise.

Takeaway for California Employers.

Prior to the U.S. Supreme Court’s Epic Systems Corp. decision, the California Supreme Court approved class action waivers in employment arbitration agreements. In its Iskanian v. CLS Transportation decision, the California Supreme Court held that class-action waivers in arbitration agreements are enforceable under the FAA. However, in the same decision, the California Supreme Court held that actions under the California’s Private Attorneys General Act (“PAGA”) are not subject to waiver. The Court concluded that “…the rule against PAGA waivers does not frustrate the FAA’s objective because…the FAA aims to ensure an efficient forum for the resolution of private disputes, whereas a PAGA action is a dispute between an employer and the Labor Workplace Development Agency.”

Given the California Supreme Court’s interpretation of the FAA, it does appear that the U.S. Supreme Court’s decision in Epic Systems Corp. will change the legal landscape in California. Under this new U.S. Supreme Court decision, class-action waivers in arbitration agreements have become enforceable again, but PAGA waivers will remain unenforceable – unless and until we get a different ruling from the California or the U.S. Supreme Court.

The Labor and Employment attorneys at Weintraub Tobin are happy to assist in the review and drafting for employment arbitration agreements. Feel free to contact us.