“The Writing Is on the Wall:” The Seventh Circuit Holds Title VII Prohibits Discrimination Based on Sexual Orientation

On April 4, 2017, the Seventh Circuit Court of Appeal became the first United States appellate court to hold that Title VII of the Civil Rights Act of 1964 prohibits discrimination on the basis of sexual orientation.  This is a landmark decision and we expect the issue to reach the U.S. Supreme Court in coming years after other circuits decide the issue. Continue reading

Chipping Away at Arbitration: California Supreme Court Further Limits Arbitration Waivers

On April 6, 2017, the California Supreme Court held that an arbitration agreement waiving the right to public injunctive relief is contrary to California public policy and is unenforceable under California law.

In McGill v. Citibank, NA,Plaintiff Sharon McGill filed a class action lawsuit against Defendant Citibank arising from Citibank’s offering of a credit insurance plan that Ms. McGill bought to protect her credit card account. The Complaint alleged claims under the Unfair Competition Law (“UCL”), the Consumer Legal Remedies Act (“CLRA”), and the false advertising law, and, among other things, requested an injunction prohibiting Citibank from continuing to engage in allegedly illegal and deceptive practices.

Citibank filed a motion to force McGill to arbitrate her claims individually based on a pre-dispute arbitration provision in McGill’s account agreement. The trial court agreed that McGill should be required to arbitrate her claims for monetary damages, but denied the motion as to her claims for public injunctive relief. (“Public injunctive relief” means an injunctive remedy with the primary purpose and effect of prohibiting unlawful acts that threaten future injury to the general public.) In so ruling, the trial court relied on the Broughton-Cruz rule established by the California Supreme Court, which holds that agreements to arbitrate claims for public injunctive relief under the CLRA, the UCL, or the false advertising law are not enforceable in California.

The Court of Appeal reversed, concluding that all of McGill’s claims should be sent to arbitration on the basis that the Federal Arbitration Act (“FAA”) as construed by the U.S. Supreme Court in AT&T Mobility LLC v. Concepcion, preempted the Broughton-Cruz rule.

McGill petitioned the California Supreme Court for review, asserting that (1) the Court of Appeal erred in finding FAA preemption of the Broughton-Cruz rule; and (2) the arbitration provision was invalid and unenforceable because it waived McGill’s right to seek public injunctive relief in any forum.

The California Supreme Court declined to address McGill’s first claim, but agreed with her second claim. Specifically, the Court held that because public injunctive relief was a remedy available to private plaintiffs under the CLRA, the UCL and the State’s false advertising law, any contractual provision the purported to waive statutory rights to seek public injunctive relief under State law is unenforceable. In doing so, the Court relied on language in the U.S. Supreme Court decision American Express Co. v. Italian Colors Restaurant, https://www.supremecourt.gov/opinions/12pdf/12-133_19m1.pdf, reasoning that “the high court has recently indicated that the FAA does not require enforcement of a provision in an arbitration agreement that ‘forbid[s] the assertion of certain statutory rights’ or that ‘eliminates [the] right to pursue [a] statutory remedy.”

Takeaways

For employers, as a practical matter, the fact that employees can pursue public injunctive relief outside arbitration may not be impactful (by contrast, the McGill case was a consumer class action). The real impact of this decision may be that it provides yet another basis for a court to determine that an arbitration agreement is “permeated by unconscionability” and is unenforceable (although the trial court in McGill did, in fact, enforce the agreement and sever the injunctive relief claims). Given the California Supreme Court’s continuing attempts to chip away at the U.S. Supreme Court’s holding in AT&T Mobility LLC v. Concepcion, employers who use arbitration agreements should consult with employment counsel to ensure all language in such agreements is enforceable, including “carve-outs” for public injunctive relief.

Amy Durgan

EU Data Privacy Rules and Penalties Reach America: Are You Ready?

What is European Data Privacy Law and why does it impact California and other U.S. based companies?

The Charter of Fundamental Rights of the European Union, Article 8, protects everybody’s personal information.  Effective May 24, 2016, the EU’s General Data Privacy Regulation (“GDPR” or “the Regulation”) began to protect this right in the digital age. Continue reading

Commission-Based Employees in California Must Receive Separate Pay for Rest Breaks

Last week, in Vaquero v. Stoneledge Furniture, LLC, Case No. B269657, the California Court of Appeal decided that hourly employees that are exclusively compensated on a commission basis must also be separately paid for required rest periods.

Under California law, employers must provide their non-exempt workers with paid ten-minute rest breaks for each four hours of work (or major fraction thereof). In Vaquero, two former sales associates brought suit alleging that they had not been paid for the rest breaks that Stoneledge provided. Under Stoneledge’s commission plan, the employer tracked all hours worked by the commissioned salespersons and compensated them in one of the two ways:

  • If the sales associate’s earned commissions exceeded the guaranteed minimum [$12.01 per hours worked], then the associate would receive the actual commissions earned based on a “percentage of sales”;
  • Alternatively, if the sales associate’s earned commissions fell below the guaranteed minimum, then the sales associate would be compensated based on a $12.01 per hour basis, which would serve as an advance against future commissions.

In other words, in the event a commissioned salesperson failed to make the equivalent of $12.01 per hour, Stoneledge would provide that worker with an advance that would be paid back through clawed back deductions from future paychecks. However, to ensure that its sales associates were never paid less than the $12.01-per-hour guaranteed minimum, Stoneledge’s plan never took repayment if it would result in payment of less than guaranteed minimum.

In moving for summary judgment, Stoneledge asserted that the rest period claim failed because of its guaranteed minimum plan: “all time during rest periods was recorded and paid as time worked identically with all other work time,” such that sales associates were paid at least $12.01 per hour even if they made no sales at all. The trial court agreed, concluding that “Stoneledge’s payment system specifically accounted for all hours worked. . . and guaranteed that [sales associates] would be paid more than the $12 an hour for those hours [such that w]ith this system there was no possibility that the employees’ rest period time would not be captured in the total amount paid each pay period.”

The Court of Appeals, however, disagreed with the trial court, finding that the Stoneledge’s plan did not properly compensate the commissioned salespersons for rest break time in part because the “plain language of Wage Order No. 7 requires employers to count ‘rest period time’ as ‘hours worked for which there shall be no deduction from wages.’” In so finding, the Vaquero Court cited Bluford v. Safeway, Inc.(2013) 216 Cal. App. 4th 864, a case that involved Safeway truck drivers who sued Safeway for, among other things, failing to provide paid rest periods. In Bluford, Safeway paid the drivers “based on mileage rates applied according to the number of miles driven, the time when the trips were made, and the locations where the trips began and ended,” and, similar to Stoneledge, Safeway asserted that its compensation system subsumed payments for rest periods into the mileage rates Safeway negotiated in the drivers’ collective bargaining agreement, but none of the bases on which Safeway paid its drivers directly compensated them for rest periods.   The Bluford court determined that because the applicable wage order similarly prohibited employers from “deduct[ing] wages for rest periods,” employers “must separately compensate employees for rest periods where the employer uses an “activity based compensation system” that does not directly compensate for rest periods.

Relying on Bluford, the Court of Appeal in Vaquero first determined that “nothing about commission compensation plans justifies treating commissioned employees differently from other [hourly] employees,” and then held that “Wage Order No. 7 requires employers to separately compensate employees for rest periods if an employer’s compensation plan does not already include a minimum hourly wage for such time.” Among other things, the Vaquero court reasoned that the “commission agreement used by Stoneledge [was] analytically indistinguishable from a piece-rate system in that neither allows employees to earn wages during rest periods. Indeed, the purpose of a rest period is to rest, not to work.” Finally, in reaching its conclusion that Stoneledge’s commission plan did not separately compensate its sales associates for rest breaks, the Vaquero court highlighted the fact that the commission agreement did not compensate for rest periods taken by sales associates who earned a commission instead of the guaranteed minimum.

Takeaways

Going forward, California employers with commissioned-based compensation plans and those with piece-rate compensation plans should review and revise such plans to ensure that they separately account for – and pay for rest periods – to comply with California law and Wage Order 7. Further, employers should ensure that this separate break-out of paid rest periods is not subject to any deduction.

-Derek Ishikawa

Trump Admininstration’s New DHS Immigration Enforcement Criteria And The Future of Travel/Visa Ban

After a short lull in immigration policy action, things are changing again. Last week the Trump Administration informed the 9th Circuit Court of Appeals that it would issue a new Executive Order (EO) on the travel/visa ban this week which will replace the initial EO and moot the 9th Circuit’s national temporary restraining order. The new EO is expected late this week and has not been released in draft form. The Trump Administration has offered some information about the new EO as follows: it will not take effect immediately upon issuance, to allow for preparations and avoid the chaos that ensued when the initial EO took effect immediately; it will apply to the same seven countries (Iran, Iraq, Libya, Somalia, Sudan, Syria, Yemen); it will clarify how it applies to dual citizens of a listed country and another country that isn’t on the list; it will be clear that lawful permanent residents of the US are not affected by the EO; it may allow some refugees from Syria. These points address the most obvious legal and operational deficiencies of the initial EO. Continue reading

Physician Heal Thyself: California Sets Nation’s Highest Standard For Health Care Workplace Violence Prevention

The facts are distressing: according to federal Occupational Safety and Health Administration statistics, over half of all reported workplace violence incidents occurred against workers in healthcare and social assistance. Nurses are attacked at more than 3 ½ times the average national rate of occupational violence. Continue reading

Looking Ahead: Immigration & International Programs Under the Trump Administration

President Trump’s recent Executive Order 13769 (EO) on immigration caused tumult for many colleges and universities when it was implemented. With more than 20 lawsuits challenging the EO, on Feb. 9 the 9th Circuit Court of Appeals upheld a national temporary restraining order (TRO) granted by U.S. District Court in Washington state. While this is a major victory for the rule of law and constitutional separation of powers, it’s only temporary. Additional court rulings and executive orders on immigration are expected, and the approach is difficult to predict.

(To continue reading this post, click here.)

-Leigh Cole

 

Trump Labor Nominee, Andrew Puzder, Withdraws

Andrew Puzder, the fast food CEO that Donald J. Trump nominated to be Labor Secretary, abruptly withdrew his name from consideration today following revelations that he was physically abusive to his wife and that he employed an undocumented worker at his home.  Puzder had reportedly lost the support of several Republican senators, guaranteeing that his nomination would fail.   Continue reading

Take a Seat: Takeaways from Bank of America’s $15 Million Suitable Seating Settlement

As we previously blogged here, in April 2016, in Kilby v. CVS Pharmacy, Inc., the California Supreme Court ruled, without providing much guidance, that suitable seating is required “when the nature of the work reasonable permits the use of seats.” Last fall, Bank of America (BofA), in a similar representative action, agreed to settle a suitable seating lawsuit for $15 million, filed on behalf of all of its California non-exempt tellers.  The settlement provides some interesting insights about settlements of class and representative actions, and provides some guidance on the suitable seating requirement under California law.

The Players: The settlement involved two cases that were filed between 2011 and 2013.  In April 2011, two plaintiffs, Rhonique Green and Olivia Giddings, filed a putative class action complaint in Los Angeles County Superior Court (the Green action), seeking damages and civil penalties under the California Private Attorneys’ General Act (“PAGA”) on behalf of themselves and all current and former BofA California tellers.  The plaintiffs alleged BofA required them to stand while working, in violation of California’s Wage Order, even though there was “ample space behind each counter to allow for the use of a stool or seat by Bank of America’s tellers during the performance of their work duties.”  BofA removed the Green case to federal court.  In October 2013, Nicole Garrett filed another complaint (the Garrett action) against BofA in Alameda County Superior Court, seeking civil penalties through a PAGA “representative action.”  The Green action was stayed pending resolution of the Garrett action.

Who Got Paid: Upon settlement of the Garrett Action, after $5 million (1/3 of the settlement) plus litigation costs went to plaintiffs’ counsel, 75% of the settlement was distributed to the State of California (the Labor Workforce Development Agency, or “LWDA”), leaving 25% to the allegedly aggrieved employees.  The three named plaintiffs each received a $25,000 enhancement before the remaining 25% was divided among the representative group of employees.

Interesting Features of the Settlement: In addition to the $15 million settlement, BofA agreed to non-monetary terms that should help prevent future suitable seating litigation against it.  Specifically, BofA agreed to provide suitable seating for its tellers at all California BofA branches.  BofA agreed to inform tellers (via managers and meetings with tellers) that they have the right to use seats while working when the nature of their work reasonably permits sitting.  Under the settlement agreement, the term “reasonably permits sitting” requires BofA to provide seats to tellers when they are working on the teller line and/or at a teller window, including when they are assisting customers. However, the “suitable seating” provision does not apply when it is not possible for the teller to remain seated while performing his or her job, such as when the teller is printing.  Also under the agreement, BofA now instructs tellers to advise management if a seat is not available so management can promptly provide a suitable seat.  Last, BofA agreed to post documentation regarding its suitable seating policy for employees to access along with other policies and procedures.

The Bottom Line: The terms of this settlement don’t necessarily have a ripple effect beyond BofA and the putative class, and the agreement does not do much to illuminate the “suitable seating” requirement.   The law is still fairly undefined as to when the workplace “reasonably permits the use of seats.”  Because of that uncertainty, and the substantial potential damages and penalties that may be sought in a PAGA or class-wide suitable seating action, employers should evaluate whether their workplace reasonably permits the use of seats, using the Court’s reasoning in Kilby v. CVS Pharmacy, Inc. as a guide. If such provision of seating is warranted, then the next step is to prepare a written suitable seating policy; to disseminate and inform employees of this policy and the availability of suitable seating, and to provide suitable seating pursuant to that policy. Further, because the law is murky as to when work “reasonably permits” seating, employers should conduct such an analysis with the aid of counsel.

-Alison Hamer