California Employment Law Update

Could “CEO Action Pledge” Lead to Unintended Consequences?

The #MeToo movement has propelled employers across the U.S. to look not only at their policies for dealing with discrimination and harassment but also at their efforts to hire and promote employees from traditionally underrepresented groups. More than 450 CEOs and presidents across 85 industries have signed the CEO Action for Diversity & Inclusion, a pledge designed to promote diversity in the workplace. In an expert analysis for Law360, Anthony Oncidi looks at the potential implications of this pledge on employment litigation:



September 2018 California Employment Law Notes

We invite you to review our newly-posted September 2018 California Employment Law Notes, a comprehensive review of the latest and most significant developments in California employment law. The highlights include:

Social Media Mania — Be Careful Out There!

Employers are increasingly turning to social networking sites to find additional information about candidates. In fact, recent articles suggest that an applicant’s failure to have a social media presence is viewed by many employers as a decided negative, and a 2006 CareerBuilder survey found that 70 percent of employers use social networking sites to research candidates, a number that certainly has gone up since the survey was conducted.

While employers are understandably interested in getting as much useful information as they can about candidates, they should also be aware of the restrictions California law imposes on access and use of social media. Since 2013, California Labor Code Section 980 has prohibited employers from requiring or requesting an employee or applicant to disclose a username or password for the purpose of accessing the employee’s or applicant’s personal social media. See Cal. Employment Law Update New California Law Protects Employee Use of Social Media” (Sept. 28, 2012) for a discussion of the statute.

Employers also need to be alert to the fact that in viewing an applicant’s public social media, they may obtain information that they are prohibited from considering (e.g., an applicant’s race, age or nationality, previous criminal convictions, possible pregnancy status, disabilities, etc.).

As social media grows ever larger and more popular, employer use of such sites in assessing job applicants will only increase. While social media may provide a fertile source of information, employers must remain alert to comply with California law and not unwittingly obtain or use information that they may not permissibly use.

Do California’s New Restrictions on Independent Contractors Apply Retroactively?

On May 1, we reported on the California Supreme Court’s opinion in Dynamex Operations West, Inc. v. Superior Court, in which the Supreme Court set forth the standard for determining if a worker may properly be classified as an employee or independent contractor. See  Cal. Employment Law Blog (May 1, 2018). An issue that the Court did not address is whether its opinion should be applied retroactively or prospectively only. To the frustration of many, on June 20 the Court itself denied a petition for rehearing that asked the Court to consider that very issue.

Despite the Supreme Court’s unwillingness to take up the issue, at least for now, it’s an issue that the lower courts are being asked to determine now on a daily basis. One of the first such decisions came from an Orange County Superior Court judge who ruled that Dynamex should be applied both prospectively and retrospectively. Johnson v. Imperial Showgirls, Orange Cty. Super. Ct. (Aug. 5, 2015 ).

In Johnson, a class of exotic dancers alleged they had been misclassified as independent contractors and were owed additional compensation as employees. A key issue was whether Dynamex should be applied retrospectively. If so, it would be used to determine if the dancers had been misclassified; if not, then Dynamex could be used only to determine the dancers’ current status.

The general rule is that judicial decisions are given retroactive effect, and the trial court pointed to that rule in reaching its decision. The court also noted that the Supreme Court could have, but chose not to, make a statement that its decision applied only prospectively. In addition, the court noted that the Supreme Court had denied petitions for rehearing and refused any efforts to reconsider or amend its original decision. This, in the trial court’s view, provided additional support for its conclusion that, in line with the usual rule, Dynamex is to be applied retrospectively.

We will continue to monitor decisions on this issue. In the meantime, California employers should continue to use Dynamex to analyze any existing independent contractor arrangements regardless of when they were formed.

Another Gargantuan California Verdict… This Time for $18.6 Million

A San Diego jury awarded that amount to a former employee who claimed he was wrongfully terminated based on his arrest record and then defamed.

Michael Tilkey worked for Allstate Insurance for 30 years and was fired from his job as a field sales leader after he admitted to Allstate that he was arrested for domestic violence against his then-girlfriend.  Although Tilkey was not convicted of the charges, the company investigated the matter and concluded that Tilkey violated its policy against physical harm or violence and terminated his employment.

Tilkey filed suit in San Diego Superior Court, claiming, among other things, that Allstate impermissibly considered his arrest record when deciding to terminate his employment and that he was forced to defame himself when telling prospective employers about the reason he was terminated – a so-called “self-published defamation” claim.  He additionally sought damages for lost past and future wages, emotional distress, and reputational harm.

After a week-long trial, a jury sided with Tilkey and awarded him nearly $2.7 million in compensatory damages, consisting of approximately $960,000 for wrongful termination and $1.7 million for defamation.

The jury then awarded Tilkey an additional $16 million in punitive damages, for a total verdict exceeding $18.6 million.

Not to sound like a broken record—but arbitration agreements, anyone?

New California Statute Shields Victims/Employers from Defamation Claims

California Governor Jerry Brown has signed Assembly Bill 2770 (Assembly Member Irwin; D-Thousand Oaks), an act to amend Section 47 of the Civil Code.  The bill should protect both sexual harassment victims and employers against defamation claims from alleged harassers.

The bill was sponsored by the California Chamber of Commerce and passed the Legislature with unanimous, bipartisan support—presumably in recognition that victims and employers are facing defamation lawsuits with growing regularity from harassers who claim they have been falsely accused.

If the alleged harasser later resigns or is terminated, employers encounter a different but equally precarious problem with regard to reference checks: risk a defamation claim by advising a prospective employer about the harassment allegations or remain silent and potentially enable the harasser to harass more employees in a new work environment.

Now, harassment victims and employers will be able to breathe a little easier knowing that Civil Code Section 47(c), as amended, will broaden the definition of “privileged publication or broadcast” to include:

  1. A complaint of sexual harassment by an employee (without malice) to an employer based upon credible evidence; and
  2. Communications between the employer and interested persons (without malice) regarding complaints of sexual harassment. This includes current or former employers’ communications regarding whether the employer would not rehire the alleged harasser due to a determination that he or she engaged in sexual harassment.

Although the amendment is a step in the right direction, its impact should not be overstated.  This new protection is merely a qualified privilege, which means that harassers can (and probably will) still sue victims and employers for what they will rather effortlessly claim were “false statements” made “with malice.”  Such claims may be difficult to get dismissed even at the summary judgment stage.

July 2018 California Employment Law Notes

We invite you to review our newly-posted July 2018 California Employment Law Notes, a comprehensive review of the latest and most significant developments in California employment law. The highlights include: