California Employment Law Update

New Lawsuit Reminds Employers to Check Their Grooming Policies

A suit filed last week in San Diego Superior Court serves as a reminder to employers about the importance of keeping up-to-date on California’s evolving Fair Employment and Housing Act (“FEHA”). In the new suit, an employee, Jeffrey Thornton, claims that he was discriminated against on the basis of his race when his former employer, an event management company, allegedly told him that he would need to cut his hair, which Thornton maintained in locks. This is believed to be one of the first, if not the first, lawsuits filed that asserts claims under FEHA pursuant to the CROWN Act amendment, which took effect in January of this year.

California’s FEHA has long prohibited discrimination against applicants and employees based on race and color, among other protected characteristics. However, in 2019, lawmakers passed SB 188, also known as the CROWN Act (which stands for “Create a Respectful and Open Workplace for Natural Hair”), which amended FEHA and a portion of the Education Code, to expand the definition of “race” to include discrimination based on “traits historically associated with race, including, but not limited to, hair texture and protective hairstyles.” The amended FEHA specifically lists locks as among the types of “protective hairstyles” subject to protection.

The CROWN Act was designed to target workplace dress and grooming policies that may have a disproportionate and/or discriminatory impact on employees of color. This topic has been at the forefront of public discourse and was even the subject of a segment in the popular HBO show Last Week Tonight with John Oliver, earlier this year. Although Thornton’s employer maintains that this is a simple miscommunication (not unlawful bias), the lawsuit is a reminder to California employers to closely examine their discrimination, dress code, and grooming policies to ensure that they address the CROWN Act, and to train supervisors accordingly. Employers outside of California should take note as well; 13 other states have passed similar legislation, and that number is only likely to grow. Additionally, federal versions of the CROWN Act have been introduced in both the House and the Senate.

House of Cards: What Employers Can Learn From Kevin Spacey’s Alleged Missteps

Kevin Spacey’s legal troubles have taken a costly turn as the production companies behind Netflix’s House of Cards recently asked a California court to confirm an arbitration award of almost $31 million against Spacey for breach of contract. In 2017, eight House of Cards crew members came forward to accuse Spacey of sexual harassment and sexual assault. The producers argued that reports of Spacey’s alleged misconduct forced them to halt production on House of Cards, costing millions.

This arbitration award is only the latest of Spacey’s legal difficulties related to his alleged actions. An October ruling by Judge Lewis A. Kaplan in Rapp et al v. Fowler granted a motion to compel a series of emails exchanged between Spacey, his lawyers, his manager, and his PR consultants regarding how Spacey should respond to allegations published in Buzzfeed about Spacey’s sexually assaulting a minor in 1986.

Judge Kaplan rejected Spacey’s argument that these emails were privileged because they were created in the course of obtaining legal services. Although Spacey and his PR team may well have expected legal charges in the wake of the Buzzfeed article, their primary concern was protecting Spacey’s reputation rather than defending against or forestalling an indictment.

This case is a reminder that clients can waive privilege by sharing otherwise protected information with a third party—such as a PR consultant—unless that disclosure was necessary to obtain legal services. In reaching this conclusion, Judge Kaplan cited Calvin Klein Trademark Tr. v. Wachner, where the Southern District of New York also found that communications with a PR firm were not privileged. Although not cited by Judge Kaplan, a California court reached a similar conclusion in Behunin v. Superior Court.

Why Businesses Should Take Note

The primary takeaways from Spacey’s legal woes are that: (1) an alleged harasser may have individual liability associated with his actions—both to the victim and to the employer; and (2) defendants in such cases must understand that advice regarding a public response to controversy is not necessarily legal advice and may be discoverable. This is the case even if the controversy regards allegations of illegal conduct. Spacey’s lawyers, who were included on the email exchange between Spacey and his PR team, did make some comments that constituted legal advice, but Judge Kaplan held that these privileged insertions could be subject to redaction, though the entire email thread was not privileged. Therefore, in a silver lining for Spacey, it does not appear that his lawyers necessarily waived privilege by sharing these specific comments with third parties like Spacey’s PR consultants.

On the whole, however, businesses dealing with a reputational crisis need to be aware that communications regarding press strategy or response may be discoverable. Simply looping in an attorney or restricting the discussion to potential legal allegations will not necessarily render such communications privileged.

Is the Customer Always Right? How Employers Should Respond to Patron Misconduct

As anyone who has worked in a customer-facing job can tell you, dealing with difficult customers often comes with the territory. However, when customer behavior crosses a line into illegal conduct like sexual harassment, both the customer and the employer may find themselves in hot water.

Wynn Las Vegas, a Nevada hotel, learned the hard way recently when an appellate court reinstated a lawsuit filed against the hotel by one of Wynn’s employees, Vincent Fried, in Fried v. Wynn Las Vegas. Fried argued that Wynn was liable for creating a hostile work environment not because of any harassment by a boss or coworker but rather by a customer.

What is a “hostile work environment”? In the sexual harassment context, a hostile work environment exists when an employee is the target of: 1) sexual conduct that is 2) unwelcome and 3) “sufficiently severe or pervasive so as to alter conditions of employment.”

In 2017, a customer came into Wynn’s salon and sexually propositioned Fried. Fried immediately went to his manager to report the customer, at which point the manager allegedly told him to “get it over with” and serve the customer despite the lewd comments.

This response from the manager, according to the Ninth Circuit’s recent holding, by itself could be grounds for a hostile work environment claim against Wynn.

Fried is not seeking to hold Wynn liable for the customer’s harassment. Rather, he is arguing that his manager’s response to the harassment by itself created a hostile work environment, a separate cause of action in its own right.

As the court notes in its decision, it is already well-settled across all circuits that employers can create a hostile work environment by failing to take speedy action against harassment by a third party, such as a customer. Here, the court held that an employer’s response (or lack thereof) to a third party’s harassing conduct can independently support a hostile work environment claim, at least enough to survive summary judgment.

This means that a single instance of customer harassment, as allegedly existed here, can be enough for an employee to get before a jury.

What This Means for Employers

Of course, since this is a pretrial motion, Wynn has not lost the case just yet. The Ninth Circuit’s decision simply sends the dispute back to the District Court and presumably onto trial. But what does this holding mean for other employers, especially those in customer-facing industries like hospitality?

First—if it wasn’t already clear—businesses need to be extra vigilant in training employees how to recognize sexual harassment, no matter the source or target. In Fried’s case, the alleged harasser was a customer, but the court’s ruling could apply just as well to a contractor, supplier, visitor, or any other third party who happens to be present in a place of business.

Second, businesses should impress upon employees—especially managers and supervisors—the importance of taking swift corrective action in response to reports of harassment in the workplace, even if it’s just a single instance. Downplaying the harassing conduct could give rise to a hostile work environment lawsuit, as occurred here.

Of course, managers do not have the authority to investigate or “fire” a customer. However, that does not mean a business is powerless in the face of customer misconduct. The court suggests that Fried’s manager could have “requir[ed] the customer to leave the premises immediately” or at least have another employee serve the customer so as to protect Fried.

Wynn follows a similar case from January 2021 where an employee alleged sexual harassment by a customer. In Christian v. Umpqua Bank, the Ninth Circuit also found that the employer could have created a hostile work environment by failing to take “prompt, appropriate, and effective action” in response. The court’s suggested responses in that case included telling the customer not to come back to the premises, obtaining a no-trespassing order, or involving security.

Employers may need to get creative, since different scenarios will require different responses. Until additional guidance emerges from the courts, it is better to be safe than sorry.

November 2021 California Employment Law Notes

We invite you to review our newly-posted November 2021 California Employment Law Notes, a comprehensive review of the latest and most significant developments in California employment law. The highlights include:

View PDF

Employers Beware: California Jury Verdicts Continue to Skyrocket!

Very few companies doing business in California missed the news recently that a San Francisco jury ordered Tesla, the electric car manufacturer, to pay $137 million to a Black former elevator operator who had worked at the company for less than a year before he quit his job due to alleged racial harassment in the workplace.

Sizeable verdicts like this from California juries are not that unusual these days – and, in fact, they’re becoming even more commonplace. In the past nine years, California juries have ordered employers to pay scores of multi-million dollar verdicts. One prominent employee-side lawyer boasts “half a billion in verdicts & settlements” and lists multiple favorable verdicts on behalf of employees in the tens of millions of dollars.

We have summarized here more than two dozen VERY LARGE California jury verdicts in employment cases from the past 9 years. They range between $2.2 million to more than $186 million (in San Diego against AutoZone) – without a doubt the highest single-plaintiff employee verdict in recorded history.  Not all of these verdicts survived appeal or post-trial motions, but they do suggest a disturbing pattern that should concern any California employer.

Because of the inherent risks of litigating employment cases before California juries, many employers have tried to insulate themselves against catastrophe by requesting that employees and applicants sign arbitration agreements. The benefits of arbitration agreements are well known, but in the wake of a recent opinion from the Ninth Circuit Court of Appeals, that option, too, is imperiled in California.

It’s no surprise that many employers are fleeing California altogether, finding the costs of living and doing business here outweigh the benefits.  Just days after the $137 million verdict against his company, Elon Musk announced that Tesla will be relocating its headquarters from California to Austin, Texas. And, according to a study by the Hoover Institution, 272 companies moved their headquarters to other states during the period from January 1, 2018 through June 30, 2021.

Like Tesla, these companies (some of which have been in the Golden State for decades) are relocating to the more business-friendly states of Texas, Arizona, and Nevada where the cost of living for employees is significantly lower.

Governor Newsom Signs A Slew of New Employment Laws for 2022

As the 2021 legislative season came to a close, Governor Gavin Newsom signed numerous bills into law. From arbitration to workplace safety, these laws will impact employers across the state.  We have summarized the most important ones for you here:

Arbitration

Arbitration fees will now need to be paid upon receipt of invoice unless the arbitration agreement expressly establishes a payment schedule. The new law is meant to prevent employers from causing delay in arbitration proceedings by failing to timely pay fees or asking for extensions, unless all parties agree. The new law also provides that any time specified in a contract of adhesion for the performance of an act required to be performed shall be reasonable.  (SB 762)

 

COVID-19

Employers’ notification, benefits, and disinfecting requirements after COVID-19 exposure have been clarified.  By way of urgency statute (i.e., the law becomes effective immediately), last year’s COVID-19 notice and reporting bill (AB 685) was clarified by AB 654, which took effect on October 5, 2021. The bill revises the language in AB 685 used to describe employer’s COVID-19 notice obligations to employees about COVID-19-related benefits and the disinfection and safety information after potential COVID-19 exposure.  The law requires employers to send notice to all employees who were “on the premises at the same worksite as the qualifying individual within the infectious period” rather than solely to “employees who may have been exposed.”  The law also revises the time frame in which employers must give notice of COVID-19 outbreaks to local public health agencies from “within 48 hours” to “within 48 hours or one business day, whichever is later.” The bill exempts certain licensed health facilities from the requirement to report outbreaks to local health agencies since those facilities already have other legal reporting obligations. (AB 654)

Recall rights for “qualified” employees have been expanded. Another urgency statute, which took effect on April 16, 2021, provides recall rights to “qualified” employees who were employed by covered employers for six months or longer during the 12 months before January 1, 2020, worked at least two hours per week, and were laid off because of any non-disciplinary reason related to the COVID pandemic. Covered employers include hotels, private clubs, event centers, airport hospitality operations, airport service providers, or building service providers (i.e., janitorial service).  Covered employers must follow specific requirements to provide notice of job openings to “qualified” employees.  Recall rights end on December 31, 2024. (SB 93)

Public health officials required to publish COVID-19 related orders and guidance on their websites. With this new law, when the State Department of Public Health issues a statewide order or mandatory guidance, or when local health officers issue an order related to preventing the spread of COVID-19, they will have to publish the order or guidance on their website along with the date the order goes into effect. (SB 336)

 

Discrimination, Harassment, & Retaliation

Nurses will be required to undertake implicit bias training.  Beginning January 1, 2023, nursing programs and schools will be required to include one hour of direct participation in implicit bias training.  Registered nurses (RN) will also be required to complete one hour of implicit bias continuing education within the first two years of licensure. Hospitals must also implement an evidence-based implicit bias program as part of any new graduate training program that trains new RNs. (AB 1407)

 

Record Keeping

Employers will need to retain personnel records for longer periods of time. The new law extends the current personnel records retention requirement from two to four years. If litigation has been filed, employers must retain such records until the applicable statute of limitations has run, or until the conclusion of the litigation, whichever occurs later.  SB 807 also makes several changes to the filing and tolling deadlines for bringing claims for certain civil rights violations, including claims on behalf of a class.  (SB 807)

 

Leave Laws

The scope of family care and medical leave rights has changed. The new law adds parents-in-law to the definition of a “parent” for purposes of family care and medical leave under the California Family Rights Act (“CFRA”), thereby expanding the scope of CFRA leave.  The bill also significantly modifies the process related to the small employer family leave mediation pilot program, applicable to employers with between five and 19 employees.  Among other changes, whenever an employee requests an immediate right-to-sue alleging a violation of the family care and medical leave provisions of the CFRA, the law requires the Department of Fair Employment and Housing (“DFEH”) to provide notice of the pilot program and the mediation requirement prior to filing a civil action if mediation is requested by the employer or employee. (AB 1033)

 

Medical Accommodations

Health care providers face stricter requirements when providing documentation regarding emotional support dogs.  Healthcare providers will be prohibited from providing “emotional support dog” documentation unless the provider: (1) possesses a valid, active license and includes certain enumerated information concerning that license in the documentation; (2) is licensed to provide services within the scope of the license in the jurisdiction in which the documentation is provided; (3) establishes a client-provider relationship with the individual at least 30 days prior to providing documentation concerning the individual’s need for an emotional support dog; (4) completes a clinical evaluation of the individual regarding the need for the emotional support dog; and (5) provides verbal or written notice to the individual that knowingly and fraudulently representing themselves as the owner or trainer of a guide, signal, or service dog is a misdemeanor. (AB 468)

 

Non-Disclosure and Confidential Settlement Agreements

Prohibition of non-disclosure provisions in settlement agreements is expanded. Currently, Civil Procedure Code section 1001 (“Section 1001”) prohibits settlement agreement provisions that bar disclosure of factual information regarding an administrative or civil claim for sexual assault, sexual harassment, harassment or discrimination based on sex, failure to prevent such an act, or retaliation against a person for reporting such an act.  For purposes of agreements entered into on or after January 1, 2022, the new bill expands the prohibition to include acts of workplace harassment or discrimination not based on sex.  Consistent with existing law, a provision that shields the identity of the claimant and facts that could lead to the discovery of the claimant’s identity, including pleadings filed in court, may be included within a settlement agreement at the request of the claimant. Also, the law does not prohibit the entry or enforcement of a provision in any agreement that precludes the disclosure of the amount paid in settlement of a claim. And the bill does not limit the ability of parties to agree to complete confidentiality in settlements of threatened claims that have not been filed before an administrative agency or court.

Greater limits on non-disclosure agreements for current and departing employees.  In addition to Section 1001, SB 331 also amends a portion of the California Fair Employment and Housing Act (“FEHA”), Government Code section 12964.5.  Under current law, FEHA makes it an unlawful employment practice for an employer, in exchange for a raise or bonus, or as a condition of employment or continued employment, to require an employee to sign a non-disparagement agreement or other document that purports to deny the employee the right to disclose information about “unlawful acts in the workplace,” including, but not limited to, sexual harassment or discrimination.

This new law provides that, after January 1, 2022, unlawful acts in the workplace include any harassment or discrimination and prohibits an employer from requiring an employee to sign a non-disparagement agreement or other document in exchange for a raise or bonus, or as a condition of employment or continued employment if it has the purpose or effect of denying the employee the right to disclose information about those acts.  Further, if an employer requires employees to sign a non-disclosure agreement during employment, the new law requires that employers include the following language:  “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.

SB 331 also expands existing law by making it unlawful for an employer or former employer to include in any separation agreement a provision that prohibits the disclosure of information about unlawful acts in the workplace.  Beginning January 1, 2022, any non-disparagement or other contractual provision that restricts an employee’s or former employee’s ability to disclose information related to conditions in the workplace must include, in substantial form, the following language: “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.”  Further, SB 331 requires: (1) that a separation agreement notify the employee that they have a right to consult an attorney regarding the agreement; and (2) the employer to provide the employee with a reasonable time period (at least five business days) in which to do so.

Importantly, the requirements above regarding separation agreements (i.e., the required statement and notice regarding right to counsel) do not apply to a “negotiated settlement agreement to resolve an underlying claim that has been filed by an employee in court, before an administrative agency, in an alternative dispute resolution forum, or through an employer’s internal complaint process.”  Therefore, employers must include the disclaimers and provide the required review/consideration period only in releases where employees have not yet filed a claim or charge with an administrative agency or in court, or pursued through an employer’s internal complaint process—e.g., in routine separation agreements during a layoff or restructuring.  Employers also should note that “negotiated,” in this context, means that the agreement is voluntary, deliberate, and informed, the agreement provides consideration of value to the employee, and the employee is given notice and an opportunity to retain an attorney or is represented by an attorney.

Agreements or other documents that violate the new law are contrary to public policy and unenforceable. (SB 331)

 

Unfair Competition

Authority of county counsel to prosecute unfair competition cases increases. In an expansion of Sections 17204, 17206, and 17207 of the California Business and Professions Code, which authorizes the prosecution of injunctions and imposition of civil penalties against those who are engaging or have engaged in unfair competition, SB 461 allows actions to be brought by the county counsel of a county within which a city has a population in excess of 750,000 people. Prior to the enactment of SB 461, the Attorney General, a city attorney of a city having a population in excess of 750,000, and county counsel authorized by agreement with the district attorney, could already bring actions under these code sections. (SB 461)

 

Wage and Hour

Food delivery and facility personnel will keep all of their tips. The new law makes it unlawful for a food delivery platform to retain any portion of amounts designated as a tip or gratuity. Instead, food delivery platforms must pay any tip or gratuity for a delivery order to the person delivering the food or beverage.  Any tip or gratuity for a pickup order must be paid in its entirety to the food facility. (AB 286)

Warehouse distribution centers will be required to disclose quotas to nonexempt employees. Under this new law, warehouse distribution centers will be required to provide to each nonexempt employee, upon hire, or within 30 days of the effective date of these provisions, with a written description of each quota to which the employee is subject, including the quantified number of tasks to be performed, or materials to be produced or handled, within the defined time period, and any potential adverse employment action that could result from failure to meet the quota. An employee shall not be required to meet a quota that prevents compliance with meal or rest periods, use of bathroom facilities, or occupational health and safety laws. An employer is prohibited from taking adverse action against an employee for failure to meet a quota that has not been disclosed or for failure to meet a quota that does not allow a worker to comply with meal or rest periods or occupational health and safety laws. If a current or former employee believes that meeting a quota caused a violation of their right to a meal or rest period or required them to violate any occupational health and safety law or standard, they have the right to request, and the employer is required to provide, a written description of each quota to which the employee is subject and a copy of the most recent 90 days of the employee’s own personal work speed data. A current or former employee can bring an action for injunctive relief to obtain compliance with specified requirements, and may, upon prevailing in the action, recover costs and reasonable attorney’s fees in that action. The Labor Commissioner is required to enforce these provisions. (AB 701)

For further information please check out our recent blog post.

Intentional wage theft will be punishable as grand theft. Any employer found to have engaged in the intentional theft of wages, gratuities, benefits, or other compensation, in an amount greater than $950 from any one employee, or $2,350 in the aggregate from 2 or more employees, in any consecutive 12-month period may be convicted of grand theft. These wages, gratuities, benefits, or other compensation that are the subject of a prosecution under these provisions can be recovered as restitution. For the purposes of these provisions, independent contractors are included within the meaning of employee, and hiring entities of independent contractors are included within the meaning of employer. (AB 1003)

Brand guarantors and garment manufacturers prevented from paying piece-rates, required to maintain records for four years, and may be held jointly and severally liable for unpaid wages to contractors. A new law imposes joint and several liability for brand guarantors, and garment manufacturers for payment of wages to employees of their contractors. It also limits garment manufacturers’ ability to pay their workers piece-rates, imposing a penalty of $200 payable to the employee, for each employee when paid by piece-rate.  Additionally, garment manufacturers and brand guarantors will be required to maintain all garment work-related documentation, such as contracts, invoice, and purchase orders, for four (4) years. Existing law requires employers to maintain these records for three (3) years. (SB 62)

Labor Commissioner authorized to record liens on real property.  The new law authorizes the Labor Commissioner to create, as an alternative to a judgment lien, a lien on real property to secure amounts due to the commissioner for final citation, findings, or decision. (SB 572)

Sub-minimum wages permits for disabled employees will be phased out. The new law requires the development of a plan to phase out the program that currently authorizes employers with special licenses to pay less than minimum wage for employees with physical or mental disabilities under the subminimum wage certification program. SB 639 prohibits new licenses from being issued after January 1, 2022. Existing permit holders will need to meet certain benchmarks to renew their licenses in the phase-out plan. (SB 639)

Unionized janitorial workers will not be able to bring PAGA claims. A new law creates a limited exemption from the Private Attorneys General Act of 2004 for certain janitorial employees covered by a valid collective bargaining agreement in effect before July 1, 2018. Janitorial employees will no longer be authorized to bring civil actions under PAGA if the collective bargaining agreement (“CBA”) provides for wages, hours worked (including overtime), and other specified working conditions. Existing law authorizes aggrieved employees to bring civil actions to recover civil penalties that would otherwise be assessed and collected by the Labor and Workforce Development Agency (“LWDA”) on behalf of the employee and other current and former employees for violating certain provisions of the California Labor code. The PAGA exemption will expire the date the CBA expires or July 1, 2028, whichever is earlier. SB 646 becomes effective January 1, 2022. (SB 646)

Employers will be permitted to distribute required employment-related posters via e-mail.   Employers will be allowed to distribute information they are required to physically post to employees via email with document(s) attached.  Notably, the new law does not absolve the employer of its obligation to physically display the required postings under other state or federal laws. (SB 657)

 

Workplace Safety

Cal/OSHA directed to create an advisory committee to recommend state policies to the Department of Industrial Relations and the Legislature to protect privately funded household domestic workers’ health and safety. Cal/OSHA will also be required to develop voluntary health and safety guidance to educate domestic workers and employers. (SB 321)

Cal/OSHA can issue citations for two new categories of health and safety violations. A new law significantly expands the enforcement power of Cal/OSHA by creating two new violation categories for which Cal/OSHA can issue citations: “enterprise-wide” violations and “egregious” violations:

Enterprise-Wide Violation: This bill creates a rebuttable presumption that a violation committed by an employer with multiple worksites is “enterprise-wide” if Cal/OSHA determines that the employer has a written policy or procedure that violates certain safety rules or Cal/OSHA has evidence of a pattern or practice of the same violation involving two or more of the employer’s worksites. The employer can rebut the presumption by showing that its other worksites have different, compliant written policies and procedures.  If an employer fails to rebut the presumption, Cal/OSHA may issue an enterprise-wide citation requiring abatement.  An employer’s appeal of an enterprise-wide violation will stay abatement.  Enterprise-wide citations will carry the same penalties as repeated or willful citations, up to $134,334 per violation.

Egregious Violation: The bill gives authority to Cal/OSHA to issue a citation for an “egregious violation” if it believes that an employer has willfully and egregiously violated an occupational safety or health standard, order, special order or regulation based on at least one of seven factors defined in the statute (i.e., “the employer, intentionally, through conscious, voluntary action or inaction, made no reasonable effort to eliminate the known violation”). The conduct underlying the violation has to have occurred within five years of the citation.  The bill requires each instance of an employee exposed to that violation to be considered a separate violation for the issuance of fines and penalties, which can add up very quickly for impacted employers.

The bill authorizes Cal/OSHA to “seek an injunction restraining certain uses or operations of employment if it has grounds to issue a citation.”

The bill also gives Cal/OSHA the authority to issue a subpoena during the course of an investigation if an employer fails to “promptly” provide Cal/OSHA requested information or Cal/OSHA may enforce a subpoena if the employer fails to provide such information in a “reasonable period of time.” (SB 606)

We will continue to monitor the application and enforcement of these new laws and provide relevant updates.

Los Angeles City Council Approves Sweeping Vaccine Ordinance for Indoor Establishments

Following New York City and San Francisco, Los Angeles is the latest city to require proof of vaccination for individuals entering indoor portions of establishments.  This ordinance, which the Los Angeles City Council approved in an 11-to-2 vote, takes effect November 4, 2021.  However, beginning October 21, 2021, the ordinance requires businesses and City facilities to display an “advisory notice” informing patrons that, beginning on November 4, 2021, they must provide proof of vaccination in order to enter any indoor portion of the business.

Establishments covered under the ordinance include those where food or beverages are served, gyms and fitness venues, entertainment and recreation venues, personal care establishments and City buildings.  Proof of vaccination, or a negative Covid-19 test, will also be required of those attending outdoor events with 5,000 or more individuals.  Proof of vaccination must be cross-checked against photo identification for each patron who appears to be 18 years of age or older.

A patron may be exempted from vaccination requirements due to medical or religious reasons if the patron provides a “self-attestation” that he or she has a qualifying medical condition or a sincerely held religious belief.  Upon receipt of an applicable self-attestation, businesses must allow the patron to use any outdoor portion of the business.  If no outdoor portion is available, a patron with an exemption may be permitted indoors by providing proof of a recent negative Covid-19 test and accompanying photo identification.  Patrons who have no proof of vaccination or exemption can still utilize outdoor portions of a business or enter indoors briefly to use the restroom or pick up a takeout order, but must wear a mask.

Business owners who fail to abide by this ordinance will be warned after the first violation, fined $1,000 for the second violation, fined $2,000 for the third violation and fined $5,000 for subsequent violations.  Fines will be assessed starting November 29, 2021.  There are still questions about which agency will enforce the ordinance.

We will continue to monitor this ordinance and provide any relevant updates.

San Francisco Jury Hits Tesla with $137 Million Race Harassment Verdict

On Monday afternoon, a San Francisco federal court jury awarded $137 million to a Black former elevator operator who worked at Tesla’s Fremont facility for approximately one year before quitting his employment in 2016. After just four hours of deliberation, the jury awarded Owen Diaz $6.9 million in emotional distress damages and $130 million in punitive damages. Diaz testified at trial that Tesla employees frequently used the “n-word” and that they had drawn swastikas and nooses as well as racially disparaging images in the workplace. Tesla’s attorney noted in her closing argument that Diaz’s testimony was not supported by the evidence and “simply doesn’t make sense” since Diaz had encouraged both his son and daughter to become employees of the company.

This eye-popping verdict comes at an interesting time for Tesla, as the company’s stockholders are scheduled to vote on Thursday, October 7, on a stockholder proposal that the company prepare and publicly release a report on “the impact of the use of mandatory arbitration on Tesla’s employees and workplace culture. The report should evaluate the impact of Tesla’s current use of arbitration on the prevalence of harassment and discrimination in its workplace and on employees’ ability to seek redress.” The stockholders presumably will reflect on the fact that Melvin Berry (another Black former employee of Tesla who made similar allegations of racial harassment) won a $1 million award from an arbitrator less than two months ago. Diaz and Berry were represented by the same lawyer. These two seemingly similar cases — one tried before a jury and the other heard by an arbitrator — well illustrate why plaintiffs love juries and employers tend to prefer arbitration.

UPDATE: Three days after this verdict, Elon Musk announced that Tesla is relocating its headquarters from California to Austin, TX — joining Hewlett-Packard, Oracle, Charles Schwab and scores of other companies that have left California recently.

New California Law Imposes Strict Limits on Warehouse Distribution Centers (This Means You, Amazon!)

A new California law, effective January 1, 2022, closely regulates productivity quotas for warehouse distribution centers.  AB 701 applies to employers of 100 or more employees at a single warehouse distribution center or 1,000 or more employees at one or more warehouse distribution centers in the state and purports to address warehouse safety concerns by imposing the following:

  • Requires employers to provide a written description of each quota to which an employee is subject and any potential adverse employment action that could result from failure to meet the quota;
  • Prohibits employers from requiring that workers meet a quota that prevents them from taking meal or rest breaks or complying with other health and safety laws;
  • Prohibits adverse action against an employee for failure to meet a quota that has not been disclosed or does not allow a worker to comply with meal and rest break or occupational health and safety laws;
  • Allows a current or former employee (who believes their rights have been violated due to a quota) to request one written description of each quota to which the employee is subject and a copy of the most recent 90 days of the employee’s own personal work speed data. An employer must abide by this request and there shall be a rebuttable presumption of unlawful retaliation if an employer in any manner discriminates, retaliates, or takes any adverse action against any employee within 90 days of the employee requesting quota information or making a complaint related to a quota;
  • Authorizes a current or former employee to bring an action for injunctive relief to obtain compliance with specified requirements, and that employee may, upon prevailing in the action, recover costs and reasonable attorney’s fees in that action;
  • Requires the Labor Commissioner to enforce these provisions and the Division of Occupational Safety and Health or the Division of Workers’ Compensation to notify the Commissioner if a particular worksite or employer is found to have an annual employee injury rate of at least 1.5 times higher than the warehousing industry’s average annual injury rate.

The California Chamber of Commerce initially placed AB 701 on its “job killer” list.  Although it was removed from this list, opponents warned that it would adversely impact small businesses, consumers and farmers by increasing costs for everyday goods, creating disruptions across vital supply chains and making it more challenging to keep goods on shelves.  This law also risks encouraging frivolous lawsuits by creating new causes of action under the Private Attorneys General Act of 2004 (PAGA).

The author of this new law, Assemblywoman Lorena Gonzalez (D-San Diego), is the same legislator who brought us Assembly Bill 5 (which largely outlawed independent contractors in California).  Assemblywoman Gonzalez is the former CEO and Secretary-Treasurer of the San Diego and Imperial Counties Labor Council, AFL-CIO.  She received approximately 40 percent of all of her campaign contributions last year from organized labor.

We will continue to monitor this new law and provide any relevant updates.

Employers Beware! 1 in 3 Americans Admit They Lied on Their Resumes

A recent ResumeBuilder survey found that 32% of Americans admit to lying on their resume.  In the current highly active labor market, with 65% of employees searching for a new job according to the PwC US Pulse Survey, employers should carefully review incoming resumes.

Interestingly, the ResumeBuilder survey found: 1) resume lies are most frequent among higher earners and 2) the most common lies surround years of experience and education.  Other key survey findings include:

  • 80% of workers who lied were hired by the employer to which they lied, but almost half had the job offer rescinded after the new employer caught the lie
  • Lying on resumes is most prevalent in the technology and finance sectors
  • Men lie on resumes twice as often as women
  • The most common reason for lying on resumes was to improve chances of getting hired (72%); lacking the necessary qualifications for the job (44%); and covering up parting on bad terms from a previous employer (41%).

Employers should review their hiring practices to ensure they are vetting resumes – whether through checking references, utilizing appropriate skills tests, behavioral or probing interview questions to expose resume dishonesty, formal background checks, internet and social media searches, and/or internal or external verification services.

LexBlog

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