California Employment Law Update

March 2019 California Employment Law Notes

We invite you to review our newly-posted March 2019 California Employment Law Notes, a comprehensive review of the latest and most significant developments in California employment law. The highlights include:

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California Legislature Tries Yet Again to Outlaw Arbitration Agreements…

There they go again!  As we predicted last November, the California legislature is once again trying to outlaw arbitration agreements between employers and employees.  Former Gov. Jerry Brown routinely vetoed similar bills that sought to prohibit arbitration of employment disputes on the anodyne ground that such legislation unquestionably conflicts with and is preempted by federal law. (Gov. Brown’s veto message.)  However, with a new governor at the helm, apparently the legislature thinks it may get a different outcome with Gavin Newsom.  In other words, “If at first you don’t succeed….”

As everyone knows, plaintiffs’ lawyers really, really hate arbitration agreements – and, therefore, so do their many allies in the California legislature.  The lawyers usually say it’s because of the confidentiality associated with such proceedings or because of the so-called “repeat-player phenomenon” in which arbitrators allegedly tend to favor institutional parties more than individuals or because of a half dozen other reasons…but the actual reason that they really, really hate arbitration is because arbitrators tend to make reasonable monetary awards – and juries can’t always be counted on to do that.

In a 2011 Cornell University ILR School study comparing employment arbitration with jury trial outcomes, the overall median damage award in arbitration cases was between 85 and 90 percent lower than the median damage award in jury trials.  That is why plaintiffs’ lawyers (who share often 50-50 in their clients’ recovery) really, really hate arbitration.

The California Chamber of Commerce has identified this bill, AB 51, as a “2019 Job Killer” on the ground that the bill will only increase litigation costs and will delay the resolution of most claims because the bill will almost assuredly be struck down in the federal courts as being preempted by the Federal Arbitration Act.

AB 51 was heard in the Assembly Judiciary Committee on Tuesday, March 19th and was sent to the Committee on Appropriations with the instruction to pass as amended.

We’ll continue to monitor developments on this front as the news breaks…

Proskauer Releases New Survey of Workplace Issues in the #MeToo Era

The current landscape in the #MeToo Era has heightened the need for leaders at every business organization to ensure that sound and strategically aligned practices for preventing, receiving, and responding to harassment, discrimination and other workplace related claims are in place.

Proskauer has just released its findings from a broad-based survey of employers around the country who are responding to these pressing issues in real time. The initial web-based survey included more than 50 high-level legal decision makers responsible for employment issues within their organizations. Proskauer supplemented its survey results with information learned at several Proskauer Peer Perspectives events around the country, where we then presented our findings to a select group of in-house counsel and solicited additional feedback. We also conducted in-depth follow-up interviews with these decision makers before putting the finishing touches on the Survey.

Read and download the full Survey here.

Tony Oncidi Recognized by the Burton Awards and the National Law Review for Distinguished Legal Writing

March 12, 2019 (LOS ANGELES) – Partner Tony Oncidi has been recognized for distinguished legal writing by both the Burton Awards and the National Law Review. Tony’s article “Consider the True Implications of Waiving Arbitration” earned him recognition in the form of a Burton Award and a Law360 Distinguished Legal Writing Award for clear, concise and comprehensive legal writing. Additionally, he was selected by the National Law Review for a “Go-To Thought Leadership Award” to honor excellence in legal news and analysis.

The 2019 Law360 Distinguished Legal Writing Award is an honor given by the Burton Awards to only 30 articles published by the nation’s 1,000 largest law firms. The Burton Awards is a national non-profit program associated with the Library of Congress. The awards are presented by lead sponsor Law360 and co-sponsored by the American Bar Association, to reward great achievements in law, with a special emphasis on writing and reform.  The Academic Board that reviewed and selected the winning articles consists of professors from Harvard Law School, Stanford Law School, UC Berkeley School of Law as well as retired judges and government officials.

The National Law Review’s “Go-To Thought Leadership Awards” recognize 65 exceptional authors and legal organizations for their reporting of complex legislative and litigation news, as well as their strategic insight and overall industry knowledge. The recipients were selected by the National Law Review’s editors from a pool of over 100,000 legal news and analysis articles.

Tony will be honored at an award ceremony on May 20, 2019 at the Library of Congress in Washington, D.C.

Are You an Employee or a Contractor? Carpenters, Strippers and Dog Walkers Now Face that Question (Los Angeles Times Piece)

The Los Angeles Times published a piece addressing the recent and abrupt change in the rules for determining who is and who is not an independent contractor in California. As is so often the case, there are many unanticipated consequences associated with these new rules.

Read the full piece here: http://www.latimes.com/business/la-fi-dynamex-contractors-20190223-story.html

California Jury Rejects Employee’s Discrimination Claims Against Chipotle

Proving it still is possible to obtain a favorable jury verdict in California (see contrary evidence), a federal jury sided with Chipotle Mexican Grill last Wednesday in a case involving disability discrimination claims by former assistant store manager, Lucia Cortez.

Cortez alleged she suffered a miscarriage at work after years of trying to get pregnant, fell into a depression, and then needed extended medical treatment as a result. In response to her request for leave, her manager gave her 12 weeks of unpaid family medical leave. When Cortez later asked for another month off to “sort out a final doctor’s appointment,” her manager granted her one additional “courtesy week” of leave. Cortez then went behind her manager’s back and got her leave extended by another month by calling the employee benefits center.

Cortez failed to provide any medical documentation when she asked for the additional time off, while at the same time claiming that she might not be medically approved to return to work. When Chipotle informed Cortez that they were about to fill her position, she immediately asked to be put back on the schedule. Her manager refused to put her back on the schedule until she produced a doctor’s note certifying that she was able to return to work.

Cortez never sent Chipotle the required medical documentation and was thereafter fired, but was also told she could reapply for her job without losing any of her tenure or benefits. Instead of simply reapplying once she was able to return to work, Cortez sued Chipotle for discrimination based on an alleged mental disability and failure to accommodate.

Fortunately, the jury sided with Chipotle, finding that Cortez’s leave of absence and her alleged disability were not motivating factors in her termination. The jury found that her failure to return to work was the motivating factor for her discharge and that Chipotle had not failed to reasonably accommodate her alleged disability.

An employer can indeed require an employee to submit documentation from a health care provider, certifying that the employee is able to resume work following a medical leave (Cal. Code Regs. tit. 2 § 11091(b)(2)(E)). This case demonstrates, however, how complicated even a simple leave of absence situation can be in California and how easy it is for disgruntled employees to sue their employer – and to try to get a jury to second-guess the employer. The employer in this case no doubt incurred hundreds of thousands of dollars in costs and attorney’s fees in successfully defending against this action – none of which can be recovered from the employee who justifiably lost the case.

California Class Actions and PAGA (“Prettymuch All is Going to the Attorneys”) Claims Continue to Overwhelm the State

We have reported before about the huge jury verdicts that get handed out in California with alarming regularity and California’s sustained #1 ranking as the “Top Judicial Hellhole” in the nation. A corollary problem continues unabated: The prevalence of class actions and lawsuits under the Private Attorneys General Act (PAGA).

Though California accounts for 12% of the population of the United States (yes, one in eight Americans lives in the Golden State), currently more than 50% of all class actions in the country are filed here. Further, PAGA claims, which operate essentially like sloppy class actions with far fewer procedural hurdles for the plaintiff and far less oversight by judges, have flooded the courts since PAGA was enacted in 2004 – since then, more than 35,000 PAGA lawsuits have been filed and thousands more are filed each year against employers great and small.

Like most litigated claims, PAGA actions usually get settled – and that’s when the mischief really kicks in. Once a settlement amount is agreed upon, it’s a relatively common practice for the plaintiff’s attorney to allocate as little as possible to the PAGA claim because, after all, 75% of that amount must be paid to the California Labor and Workforce Development Agency (LWDA).  No one wants that!

So, in reality, “PAGA” stands for “Prettymuch All is Going to the Attorneys.”

Not surprisingly, plaintiffs’ attorneys really like PAGA because they can have it both ways: Use the threat of outsize costs, penalties and attorney’s fees to drive up the settlement value, then once a settlement amount has been extracted, allocate as little as possible to that pesky PAGA claim, which requires the 75% payment to the state.

We’ve blogged previously about how even small businesses are hurt by PAGA – read more here.

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