Client Alert

Try To Restrain Yourself: California Is Temporarily Restrained From Enforcing Arbitration Ban

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Remember California’s new ban on mandatory workplace arbitration agreements? The Eastern District of California has put it on ice, granting a temporary restraining order against the ban’s enforcement. As a refresher, and as we wrote about here, on October 10, 2019, California Governor Gavin Newsom signed into law California’s latest afront on workplace arbitration—AB 51. Under AB 51, employers may not, “as a condition of employment, continued employment, or the receipt of any employment-related benefit, require an applicant or employee to waive any right, forum, or procedure” for FEHA and Labor Code claims. Violations of the new statute carry hefty consequences, including criminal penalties. Many employers see arbitration agreements as necessary to manage employment disputes and an outright ban on this efficient process strongly affects their bottom line. The ban was scheduled to go into effect on January 1, 2020, but the TRO put enforcement on hold for now. READ MORE →

It’s Heating Up: Several California Cities Prepare For Mid-Summer Minimum Wage Increases

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We are halfway through 2019, and while many employees prepare for summer vacation, California employers in various cities should brace themselves for an additional round of minimum wage increases on July 1, 2019.

Another raise, already?

As you may recall, on January 1, 2019, California raised the statewide minimum wage rate to $12.00 per hour for employers with 26 or more employees, and $11.00 per hour for employers with 25 or fewer employees. And the California minimum wage is set to increase to $15.00 per hour for all employers by January 2023. READ MORE →

AB 5 and AB 71: CA Legislature Dukes It Out Over Dynamex and Borello

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The battle between Dynamex and Borello continues. Two competing bills – Assembly Bill 5 (“AB 5”) and Assembly Bill 71 (“AB 71”) – each seek to codify the respective worker classification tests. On May 29, 2019, the California State Assembly overwhelmingly passed AB 5, a bill seeking to codify Dynamex Operations West, Inc. v. Superior Court of Los Angeles, which adopted the three-factor “ABC” test to determine a worker’s classification for wage order claims. Now the bill is headed to the state Senate. Meanwhile, AB 71, a bill seeking to codify S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations, has thus far not enjoyed the same success. READ MORE →

A Gig Can be a Gig: US DOL Opinion Letter Breathes New Life into the Gig Economy Independent Contractor Model

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On April 29, 2019, the U.S. Department of Labor (“DOL”) issued an opinion letter finding that “on-demand” service providers working for a virtual marketplace company are independent contractors under the Fair Labor Standards Act.

The opinion letter comes almost two years after the DOL withdrew informal guidance on independent contractors issued under the Obama administration, in which the DOL concluded that “most workers are employees under the FLSA.” The new opinion letter signals an approach more friendly to “gig economy” virtual marketplace companies (or “VMCs”), online and/or smartphone-based referral services that connect consumers with service providers providing a wide variety of services, such as transportation, delivery, shopping, moving, cleaning, plumbing, painting, and household services. READ MORE →

Closing the Gender Pay Gap in France: Get Ready

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Equality between men and women has been declared in France a “great national cause” of Emmanuel Macron’s Presidency in the wake of the #MeToo movement.

In March 2018, the French government unveiled an action plan for gender equality in the workplace consisting of ten measures aiming at reducing the gender pay gap and five measures to fight sexual and gender based violence. READ MORE →

New York State and New York City Ring in the New Year With More Gender Protections

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Last year, in the immediate aftermath of the #MeToo movement, both New York State and New York City passed sweeping legislation that sought to provide additional protections for individuals from sexual harassment (see our prior blog posts here). Perhaps most notable was legislation requiring all New York State employers to adopt a sexual harassment prevention policy by October 2018 and to conduct annual sexual harassment prevention training beginning no later than October 2019, among other things. Neither the State nor City legislatures appear to be slowing down – already this year, both have enacted additional worker protections. READ MORE →

NY Harassment Update: NYS Releases Sexual Harassment Prevention Training Videos and NYC Releases Sexual Harassment Prevention FAQs

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Late last month, the New York State Department of Labor released model sexual harassment prevention training videos that employers can use to train their employees, available here. While a welcome development, the videos alone do not fully comply with the State’s requirement that sexual harassment prevention training be “interactive” – employers must ensure that employees have the ability to ask questions and receive answers to their questions. The New York City Commission on Human Rights has also provided some new and welcome guidance to employers, releasing FAQs regarding NYC’s new sexual harassment prevention laws, available here. The FAQs primarily address which employers must conduct sexual harassment prevention training and how to calculate an employer’s number of employees for purposes of determining whether the employer is subject to the training requirements. READ MORE →

California #TakesTheLead on Harassment Laws: What Does It Mean for Employers?

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As you’ve likely been monitoring, last month the California legislature passed several bills to Governor Brown for signature relating to sexual harassment. The hashtag #TakeTheLead emerged as a symbol reflecting California’s potential to become the state at the forefront of passing additional legislation characterized as increasing protection for women – and workers generally – in the face of the #MeToo movement. Late Sunday night, in the last moments before Governor Brown’s September 30 deadline, he vetoed the most contentious bill – AB 3080 – and signed into law many of the other pending bills. READ MORE →

FCRA Developments: Updated Summary of Rights & “Stand-Alone” Disclosure Need Not Be Separate In Time

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Employers across the country should dust off their background check policies and forms and be mindful of recent developments related to the federal Fair Credit Reporting Act (FCRA).

FCRA mandates specific, technical steps for employers using consumer reports to make employment decisions, including hiring, retention, promotion or reassignment.  While many employers are familiar with the importance of following FCRA requirements, actual compliance with the law can be tedious and challenging.  As the law continues to evolve, employers should be aware of recent updates to the model federal form for consumer rights and recent guidance from a California federal court related to the “stand-alone” disclosure and authorization requirement. READ MORE →

Ninth Circuit Clarifies Boundaries of California’s Restriction on Noncompete Agreements

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Taking a second look at the use of “no future employment” provisions in a settlement agreement between a doctor and his former employer, the Ninth Circuit Court of Appeals recently held that two of the three provisions constituted “restraints of substantial character” that ran afoul of California’s restriction on noncompete clauses. Golden v. California Emergency Physicians Medical Group, No. 16-17354 (9th Cir. July 24, 2018) (“Golden II”).

In 2007, Dr. Donald Golden, an emergency room surgeon, sued his former employer, California Emergency Physicians Medical Group (“CEP”), claiming that he had been fired because of his race.  After mediation, the parties orally agreed to settle the dispute. However, Dr. Golden later refused to sign a written settlement agreement, arguing that three provisions therein violated the restriction on noncompete agreements embodied by California Business and Professions Code Section 16600. Section 16600 provides that, aside from certain exceptions, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”

Dr. Golden challenged the following provisions of the proposed settlement agreement as violative of Section 16600:

  1. A provision preventing Dr. Golden from working or being reinstated at any facility that CEP owns, manages or contracts with.
  2. A provision allowing CEP to terminate Dr. Golden without any liability if CEP contracts with an emergency room at which Golden is employed or rendering services.
  3. A provision allowing CEP to terminate Dr. Golden without any liability if CEP contracts with a facility at which Golden is employed or rendering services.

The district court originally granted a motion to enforce the agreement and ordered Dr. Golden to sign, reasoning that the provisions would only prevent him from working for, not competing with, his former employer CEP, and thus Section 16600 did not apply. When the Ninth Circuit first considered this issue on appeal (Golden I), it  reversed, holding that Section 16600 applies not only to noncompetition agreements but to any contractual provision that places a “restraint of a substantial character” on a person’s ability to practice a profession, trade, or business.  The Ninth Circuit remanded the case to the district court to apply this standard, but the district court again ordered Dr. Golden to sign the settlement agreement, concluding that the disputed provisions did not constitute a restraint of a substantial character.

Addressing the dispute a second time in Golden II, the Ninth Circuit clarified that to meet the “restraint of substantial character” standard, “a provision need not completely prohibit the business or professional activity at issue, nor does it need to be sufficient to dissuade a reasonable person from engaging in that activity…[b]ut its restraining effect must be significant enough that its enforcement would implicate the policies of open competition and employee mobility that animate [Business and Professions Code] section 16600.”

The Ninth Circuit concluded that the first clause prohibiting Golden from working at any facility contracted by, owned, or managed by CEP was valid, as its effect on Golden’s ability to practice medicine was minimal. However, the court held that the second and third restrictions proposed by CEP would “easily rise to the level of a substantial restraint, especially given the size of CEP’s business in California.” CEP currently staffs 160 healthcare facilities in California and handles between twenty-five and thirty percent of the state’s emergency room admissions. Because the second and third restrictions would affect Golden’s “[existing] and future employment at third-party facilities” where CEP provided services, even if the CEP services began after Golden’s employment, and even if CEP’s services did not compete with the services Golden provided, the provisions ran afoul of Business and Professions Code Section 16600.

The Ninth Circuit’s recent decision is a good reminder that California generally disfavors noncompete agreements. California employers may wish to review their separation/settlement agreements with this case in mind or to consult with counsel to ensure that their agreements comply with California law.