New California Laws Govern Employer Access To Personal Social Media Accounts of Employees

The social media revolution continues to be born out of California.  On January 1, 2013, two laws regulating social media go into effect altering the legal landscape concerning employees’ use of facebook, twitter and other accounts.  California Assembly Bill 1844 (“AB 1844”) “prohibit[s] an employer from requiring or requesting an employee or applicant for employment to disclose a username or password for the purpose of accessing personal social media, to access personal social media in the presence of the employer, or to divulge any personal social media.” Under this new law, an employer cannot request or require an employee or an applicant to divulge his personal social media account information.  The law does contain an exception for situations where an employer “reasonably believe[s] it to be relevant to an investigation of allegations of employee misconduct or employee violation of applicable laws and regulations, provided that the social media is used solely for purposes of that investigation or a related proceeding.”

Senate Bill 1349 has a narrower reach, as it applies only to public and private postsecondary educational institutions.  Under SB 1349, those educational institutions are prohibited from requiring students or prospective students to disclose their personal user names or passwords, or to divulge personal social media information and they must post their social media policy on their website. 

Both laws have very broad definitions of “social media, which includes an “electronic service or account, or electronic content . . . videos, still photographs, blogs, video blogs, podcasts, instant and text messages, email, online services or accounts, or Internet Web site profiles or locations.”  Arguably, that covers all digital content whether it is on the internet, a cell phone, an e-mail account or otherwise.  So, while the State has publicized these laws as governing social media content, in fact, they have a much broader reach.  

However, the laws are not unlimited in their application.  For example, the laws do not prohibit employers from reviewing public social media accounts held by employees, nor do they regulate the ability of an employer to discipline an employee based on content posted on a public social media page (though other laws may).  Indeed, the law specifically allows employers to demand passwords where they reasonably believed to be necessary to conduct an investigation into workplace misconduct.  Finally, the laws apply only to “personal” social media accounts, so an employer could demand passwords for a work-related account

Nonetheless, California employers should ensure that employees who interview applicants and HR professionals fully understand the laws, their scope and their prohibitions.  Employers should exercise particular caution when seeking access to employee’s personal social media accounts.

- Dan Handman  (Los Angeles)

Another Employer-Friendly Arbitration Decision From The U.S. Supreme Court

The U. S. Supreme Court continued its trend of pro-employer arbitration decisions in Nitro Lift Technologies, LLC v. Eddie Lee Howard, finding that the federal policy favoring arbitration trumped a state law disfavoring the enforcement of non-compete agreements.  Nitro-Lift brought a demand for arbitration against two of its former employees, located in Oklahoma, who went to work for a competitor.  Both had entered into confidentiality and non-compete agreements that contained an arbitration clause.  The former employees responded by suing Nitro-Lift in Oklahoma state court for a declaratory judgment that the non-compete agreements were unenforceable and void. The trial court dismissed the complaint in light of the valid arbitration clauses, but the Oklahoma Supreme Court reversed, finding that an Oklahoma statute which limits the enforceability of non-compete agreements required judicial review of the agreement – not an arbitral review. 

The U.S. Supreme Court vacated that decision and forced all matters related to the non-compete agreements to be arbitrated. It found that “the validity of [a] contract, as distinct from attacks on the validity of the arbitration clause itself, are to be resolved ‘by the arbitrator in the first instance, not by a federal or state court.’”  It vacated the decision because the Oklahoma courts decided the validity of the non-compete agreements when the only issue properly before it was the enforceability of the arbitration clause. 

The Court went one step further, however.  It re-affirmed the notion that “when state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by [federal law].”

What is the impact for California employers?  It was just over a year ago that the Supreme Court vacated the California Supreme Court’s decision holding that class action waivers in arbitration agreements were unenforceable.  At least two California courts have taken that lead and have upheld class action arbitration waivers, but in one other decision, a California court found that a claim under the Private Attorney’s General Act could not be compelled to arbitration.  This decision raises the stakes on all of those courts and signals the courts willingness to strike down any decision which  

- Dan Handman (Los Angeles)

NLRB Judge Broadens Ruling Prohibiting Class Action Waivers

An NLRB Administrative Law Judge has issued a decision that significantly broadens the Board’s earlier decision that an arbitration agreement prohibiting class actions violates Section 7 of the Act.  Were this decision to be approved by the full Board, it could have serious implications for both non-union and union employers. 

Earlier this year, in D.R. Horton, the Board found that arbitration provisions which prohibit employees from bringing class actions can violate Section 7 of the National Labor Relations Act.  That section of the Act protects the rights of employees engage in so-called concerted, protected activities.  The D.R. Horton decision was notable because, among other things, it appeared to contradict a recent decision from the U.S. Supreme Court in AT&T Mobility , LLC v. Concepcion, which found a class action waiver in an arbitration agreement to be lawful.

This ALJ decision was significant because of the nature of the arbitration policy at issue.  Unlike D.R. Horton,  employees were not required to sign arbitration agreements, but were allowed to opt out of the process.  As a practical matter, therefore, they were not forced to waive their right to bring class action claims. 

Yet, the ALJ found that the provision was “an illusion” because the process was “convoluted” and because employees would be unable to identify others who had also opted out.  Because of that, he found that the agreement still required employees to forfeit their right to engage in concerted, protected activity and ordered the company to remove the prohibition against class or collective actions and to notify all employees of the change. He also ordered the employer to notify all arbitral or judicial tribunals where it has pursued enforcement of the clause that it desires to withdraw the request.

This decision will almost certainly be reviewed by the full Board and potentially by one of the U.S. Courts of Appeal.  The D.R. Horton case is presently being reviewed by the U.S. Court of Appeals for the Fifth Circuit.  At least one California court has already rejected arguments that the D.R. Horton decision invalidates otherwise enforceable class action waivers in arbitration agreements.

- Dan Handman (Los Angeles)

Workplace Violence Update From Glen Kraemer

HK Partner and workplace violence expert Glen Kraemer recently published an article titled “Decisionpoint” in the Workplace Violence Prevention eReport.  The Decision Point article describes difficult real life situations involving workplace violence along with Glen’s advice on how the matters should be handled.  A copy of the article can be viewed here: Workplace Violence Prevention eReport – Decisionpoint

New Class Action Decisions Continue To Favor Employers

In a post-Brinker and Dukes world, employer-friendly wage-hour decisions are becoming more and more common.  The decision of the California First District Court of Appeal’s decision in Morgan v. Wet Seal Inc. continues that trend. 

In that case, the court upheld a trial court’s decision to deny class certification of three plaintiffs’ claims against their former employer Wet Seal, Inc.  The plaintiffs alleged that Wet Seal violated California law by: (1) requiring employees to purchase Wet Seal apparel; and (2) travel between store locations without reimbursing them for mileage. 

Why was class certification denied?  Because, as courts are now much more likely to find, individual issues predominated over common issues.  In this case, the company’s written dress code policy was vaguely written and did not explicitly state employees must purchase Wet Seal clothing.  As a result, the court found that individual inquiries were necessary to determine whether the company compelled employees to wear its clothing, what apparel the dress code in fact required, and whether any purchases of Wet Seal clothing were an obligated expenditure.  The same was true with the travel expense reimbursement claim, which required numerous individual inquiries because the company’s written policy stated that it did reimburse employees for reasonable expenses. 

What’s the take-away from this case?  It reflects a positive movement for employers in wage and hour class actions of courts denying class certification due to individual required inquiries.  It also reinforces the importance that employers maintain written policies that accurately reflect the law, which will help reduce the likelihood of such lawsuits and help defend against them.  And, it is useful to employers in that it clarifies that employers need only reimburse employees for purchasing a product where they require, and not merely encourage, employees to do so. 

- Alison Hamer (Los Angeles)

Voters In San Jose and Long Beach Change Local Employment Laws

On election night, San Jose, California voters passed a measure increasing the city’s minimum wage from $8.00 to $10.00/hour.  The state’s minimum wage is currently $8.00.  The wage increase is likely to take effect in March 2013.

California voters in the city of Long Beach passed their own wage measure.  Measure N requires nonunionized hotel operators with at least 100 rooms to pay employees an hourly rate of $13.00 or allow them to unionize.  The initiative also requires that hotels pay an automatic 2 percent annual raise to employees and provide full-time hotel employees with a minimum of five paid sick days per year.  If hotels agree to enter into collective bargaining with employees and unions, then the wage mandates do not apply.  Opponents argued that the hotels are being forced to unionize and the wage increase will make it more difficult for Long Beach’s tourism industry to compete with neighboring Los Angeles.  Measure N is expected to take effect by the end of the year. 

-Kristin Oliveira (San Francisco)

NLRB Reverses Course On “At-Will” Employment Policies

You may have been surprised when, a few months ago, an Administrative Law Judge (ALJ) for the National Labor Relations Board in Phoenix, AZ turned the world of employment law on its head by finding that an unremarkable at-will employment policy in an employee handbook violated the Act.  In that case, the ALJ held that the absolute at-will provision constituted a waiver of the Section 7 right to engage in concerted activity to change employees’ at-will employment status, and was therefore unlawful.

On October 31, 2012, the NLRB backtracked.  In two different “Advice Memos” (found here and here) the NLRB’s Department of Advice reversed course finding that two at-will policies were consistent with the Act and did not infringe on Section 7 rights.  Those memos focused on whether an at-will employment provision in the handbooks of Rocha Transportation, a California Central Valley shipping company, and SWH Corp., which operated an Arizona restuarant, violated Section 7 of the National Labor Relations Act (the “Act”), which provides employees the right to organize and/or engage in other concerted activities.  The General Counsel concluded that the language did not violate Section 8(a)(1) of the Act, which prohibits rules or policies that would “reasonably tend to chill employees in the exercise of their Section 7 rights.” 

The General Counsel concluded that Rocha’s at-will employment language could not be reasonably construed to restrict Section 7 rights because it did not require employees to “refrain from seeking to change their at-will status or to agree that their at-will status cannot be changed in any way.”  The most critical point of the General Counsel’s analysis, however, was that “the provision explicitly permits [Rocha’s] president to enter into written employment agreements that modify the employment at-will relationship….”  The General Counsel stated that this provision allowed for collective bargaining to change the at-will employment, which could result in a collective bargaining agreement that is then ratified by the president of the company.  While this Memorandum does not carry the same precedential effect as a court or NLRB decision, it does provide a window into the NLRB General Counsel’s thinking on the at-will employment issue.  In light of this Memorandum, employers should review their at-will employment policies to ensure that they allow for some senior officer or manager to alter or amend an employee’s at-will employment status. 

- Rob Flemer (Los Angeles)

New Employment Laws for 2013

In addition to the new laws relating to religious accommodation and social media (reported in our recent eAlerts), Governor Brown recently signed into law the following bills affecting employers.  Unless otherwise noted below, these laws will come into effect on January 1, 2013:

New Laws Affecting All Employers

Itemized Wage Statements (AB 1744)

  • Amends Labor Code section 226 to define what is an “injury” for purposes of violating the itemized wage statement statute.  Specifically, an employee suffers an injury if either no wage statement is provided or if the employer fails to provide accurate and complete information and the employee cannot promptly and easily determine from the wage statement the following: (1) amount of gross or net wages paid to the employee during the pay period; (2) total hours worked; (3) piece rate units earned and rate; (4) deductions; (5) pay period; (6) hourly rates and corresponding hours worked at each rate; (7) name and address of the employer or legal entity that secured the employer’s services; and (8) name of the employee and only the last four digits of the employee’s social security number or identification number.
  • Clarifies that an itemized wage statement “copy,” which employers are required to keep on file for at least 3 years, can include a computer-generated record instead of an actual duplicate copy.
  • Beginning July 1, 2013, temporary services employers are required to include the rate of pay and total hours worked for each temporary services assignment.  Additionally, effective January 1, 2013, temporary services employers must include in the mandatory Wage Theft Notice provided to new employees the name, physical address of the main office, mailing address (if different from physical address) and phone number of the legal entity for whom the employee will perform work.

Wage Garnishment (AB 1775)

  • Increases the amount of wages protected from garnishment.  Under existing law, the maximum amount of wages exempt from garnishment was the lesser of 25% of an individual’s weekly disposable earnings or 30 times the federal minimum hourly wage (i.e. 30 x $7.25).  Under the new law, the maximum amount of wages exempt from garnishment will be the lesser of 25% of an individual’s weekly disposable earnings or 40 times the California minimum wage (40 x $8.00).

Warehouse Contractors And Sufficient Funds (AB 1855)

  • Adds warehouse contractors to a list of labor services contractors (construction, farm labor, garment, janitorial, security guard) with whom companies are prohibited from entering into contracts where the company knows or should know that the contract does not provide sufficient funds to allow the contactor to comply with state and federal wage and hour laws.

Compensation Agreements (AB 2103)

  • Overturns existing appellate case law by specifying that payment of a fixed salary to a nonexempt employee provides compensation only for the employee’s regular, non-overtime hours, notwithstanding any “explicit mutual wage agreement” or other private agreement to the contrary.

Breastfeeding (AB 2386)

  • Amends the Fair Employment and Housing Act to provide that the term “sex” includes breastfeeding or medical conditions related to breastfeeding.

Inspection And Copying Of Employee Personnel Records (AB 2674)

  • Requires employers to make current or former employees’ personnel records available for inspection or provide a copy if the employee requests within 30 calendar days of the employer’s receipt of the employee’s written request.  The request must be in writing but may be on an employer-provided form.  The employer may designate the person to whom a request must be made.  The parties may agree in writing to a date longer than 30 days but not to exceed 35 days from the employer’s receipt of the request.  The employer may redact the names of any nonsupervisory employees contained in the records prior to inspection or copying.
  • The employer must make the records available for inspection or copying to current employees at the place where the employee reports to work or another mutually agreed upon location.
  • The employer must make the records available for inspection or copying to former employees where the employer stores the records, unless mutually agreed upon in writing.
  • The employee may receive a copy by mail if he or she reimburses the employer for postal expenses.  If the employee was terminated for violation of law or an employment-related policy involving harassment or workplace violence, the employer may make the records available at a location a reasonable driving distance from the former employee’s residence or may mail the records.
  • Employers are only required to comply with one request for inspection or copying per year by a former employee.  An employee representative cannot request more than 50 records (i.e. of 50 different employees) per calendar month.
  • Employers are required to retain personnel files for three years after the employee’s termination of employment.
  • These provisions do not apply to an employee covered by a valid collective bargaining agreement that provides for a procedure for copying and inspection of personnel records.

Exempting Certain Payments From Written Agreement Requirement (AB 2675)

  • Legislation passed last year mandates that effective January 1, 2013, employment contracts involving commissions as a method of payment must (1) be in writing; (2) set forth the method by which the commissions are required to be computed and paid; and (3) contain a singed receipt for the contract from each employee.  AB 2675 clarifies that the term “commissions” does not include short-term productivity bonuses, temporary variable incentive payments that increase but do not decrease payment under the written contract, or bonus and profit-sharing plans, unless the employer has offered to pay a fixed percentage of sales or profits as compensation for work to be performed.

Prevailing Wages (AB 2677)

  • Increased employer payment contributions that result in a lower hourly straight time or overtime wage is not a violation of the applicable prevailing wage determination as long as certain specified conditions are met.

New Laws Affecting Public Sector Employers

Paid Leaves Of Absences For Unelected Members (AB 1203)

  • Requires a school district or a community college district to provide a paid leave of absence to a classified employee who is an unelected member of a school district public employee organization or community college district public employee organization for activities the member is authorized by the organization to attend and would require the employee organization to reimburse the school district or community college district on behalf of an unelected member who receives a paid leave of absence.  It also requires an employee organization to provide reasonable notification to the employer requesting a leave of absence without loss of compensation for any of the above-described activities.

On September 30, 2012, Governor Brown vetoed bills that:  (1) governed the working conditions of domestic employees; (2) prohibited an employer from refusing to hire an individual who was unemployed; and (3) governed the working conditions of agricultural workers.  Those bills may resurface in the future.

In light of these upcoming changes to the law, employers should focus on the following highlights:

  • Ensure that their itemized wage statements comply with the new requirements of Labor Code section 226;
  • Ensure that as of January 1, 2013, that garnishment of employees’ wages comports with California’s new wage garnishment law and be aware that they may receive garnishment orders in 2013 that are out of date;
  • Familiarize themselves with the new rules and deadlines regarding inspection and copying of current and former employees’ personnel files;
  • Ensure that compliant commission agreements are executed by employees by January 1, 2013; and
  • Update all handbooks and employment policies regarding breastfeeding, religious dress and grooming and social media protection.

- Amy Durgan (San Francisco)

Reasonable Accommodation: It’s Not Just for Some Religious Observances Anymore

On September 8, 2012, Governor Jerry Brown signed the Workplace Religious Freedom Act of 2012 into law. It amended the California Fair Employment and Housing Act to specifically state that religious clothing and hairstyles (grooming) qualify as a protected religious beliefs or observances and that segregating an employee from customers or the public is not a reasonable accommodation of an employee’s religious beliefs. Really? We needed a new legislation to tell us that?

The law also clarifies that FEHA’s “undue hardship” definition applies to FEHA’s religious discrimination provisions. When evaluating failure to accommodate allegations, California courts have applied the federal court’s “de minimis” definition to FEHA’s religious discrimination section instead of using FEHA’s “significant difficulty or expense” definition. See Soldinger v. Northwest Airlines, Inc., 51 Cal. App. 4th 345 (1996). You probably already thought the federal definition was hard enough to meet.

Why did they pass this? The legislation came about in recognition of the 9.5 percent increase in 2011 in religious discrimination cases documented by the EEOC.
AB 1964 was sponsored by Assemblymember Mariko Yamada’s (D-Davis), who is running for re-election this year, and the Sikh Coalition and supported by AFSCME, AFL-CIO, Agudath Israel of California, ACLU of California, American Jewish Committee, Anti-Defamation League, California Employment Lawyers Association, California Immigrant Policy Center, California Nurses Association, Church State Council, Consumer Attorneys of California, Council on American-Islamic Relations – California Chapter, Hindu-American Foundation, Japanese American Citizens League, North American Religious Liberty Association – West.

- Kirstin Muller (Los Angeles)

The NLRB’s Perplexing Decision On Investigations That Equally Affects Union and Non-Union Businesses

Investigations conducted by internal staff, usually human resources professionals, occur every day in union and non-union workplaces.  The employer has the responsibility to conduct a good faith investigation and reach a reasonable conclusion when a complaint comes forward.  The investigator typically requests that the witnesses interviewed refrain from discussing the subject matter of the investigation with other employees while the investigation proceeds (“the confidentiality admonition”).  Often the investigator explains that talking about the subject of the investigation may taint the memories of the other witnesses, undermine their credibility, and ultimately interfere with the investigation process to reach a fair result.  This confidentiality admonition is standard operating procedure and best practices for the employer.

Now the NLRB has determined that such confidentiality admonitions are unlawful.  This recent holding offers further evidence that the NLRB remains very interested in actively expanding its interpretation of employees’ rights under the law.

Under the NLRA, employees have the right to communicate to co-workers about wages, hours, and other terms and conditions of employment.  These Section 7 rights apply in union and non-union workplaces, even though the majority of non-union employers never give a nanosecond of thought to the application of the NLRA to their workplaces.

On July 30, 2012, in Banner Health Systems, the Board considered the actions of the employer’s human resources consultant who investigated an employee’s complaint about an instrument sterilization procedure at a hospital.  The HR consultant routinely asked employees not to discuss the matter with co-workers while the investigation was ongoing.

The Board found this conduct unlawful.  The Board stated that “to justify a prohibition of employee discussion of ongoing investigations, an employer must show that it has a legitimate business justification that outweighs employees’ Section 7 rights.”  The Board cited an earlier NLRB decision and found the employer has the burden “’to first determine whether in any give[n] investigation witnesses need[ed] protection, evidence [was] in danger of being destroyed, testimony [was] in danger of being fabricated, or there [was] a need to prevent a cover up.”  The Board concluded that the blanket approach used by the HR consultant failed to meet those requirements, determined that the conduct violated the law and ordered the hospital to stop engaging in the conduct.

This is a remarkable and illogical result.  Rather than using the usual and customary practice of requesting confidentiality to protect the integrity of the investigation, the investigator must now undertake a case-specific analysis to determine whether or not there are facts that would lead one to conclude that there is a danger of evidence being destroyed or fabricated and witnesses being compromised.  As any workplace investigator knows, there is always the risk that evidence may be altered and witnesses may collude.  There is no sure manner to preclude such a possibility, but a competent investigator takes the reasonable step to enhance the likelihood that the investigation’s evidence and witnesses will not be compromised by requesting confidentiality during the pendency of the investigation.  This admonition is calculated to protect the rights of all employees, including the complainant or the accused.  Both employees want integrity in the investigation to increase the probability of the investigator arriving at the “correct” factual conclusion.  The employee in the right does not want employees to collude or witnesses to alter evidence; the simple step of the confidentiality admonition helps the process.

The Board’s decision does not reflect the reality of how workplace investigations should be conducted.  Confidentiality is a hallmark of these investigations and needs to be preserved.  Let’s hope that the appellate courts appreciate the negative impact that this decision will have on a company’s ability to competently investigate and resolve a complaint and, as a consequence, overturn this ruling.

- John Baum (San Francisco)