The much anticipated California Consumer Privacy Act (“CCPA”) is now in effect (as of January 1, 2020), and as we’ve recently reported, class action litigation under the CCPA has already begun.  Organizations should have already assessed whether their business is subject to the new law and if so, taken steps to ensure compliance.  Likely, one of the most difficult compliance areas of the CCPA is responding to consumer requests to know the personal information a business collects about them.  Under the CCPA consumers have the right to know what personal information a business is collecting about them.  The information must be made available, free of charge, within 45 days, although extensions are available in limited circumstances. The business’s response to a request to know must be in a “readily useable format that allows the consumer to transmit this information to another entity without hindrance.” In addition, in October of 2019, as required by the CCPA, Attorney General Xavier Becerra announced Proposed Regulations that operationalize the new law and provide clarity and specificity to assist in implementation of the CCPA. The Proposed Regulations, which were recently updated, have yet to be finalized, but as is, have a technical and substantive impact on the consumer request to know process.

Please find the full article on the Jackson Lewis Workplace Privacy, Data Management & Security Report.

In a closely watched decision, Intel Corporation Investment Policy Committee v. Sulyma, Slip Op. No. 18-1116 (U.S. S. Ct., Feb. 26, 2020), construing ERISA’s three-year statute of limitations, see ERISA § 413(2), 29 U.S.C. § 1113(2), the Supreme Court held unanimously (J. Alito) that “actual knowledge” means “. . . when a plaintiff actually is aware of the relevant facts, not when he should be.”

ERISA contains a two-part statute of limitations provision for breach of fiduciary duty claims.  There is a six-year statute of repose, ERISA § 413(1), 29 U.S.C. § 1113(1); also, a matter is time-barred: “three years after the earliest date on which the plaintiff had actual knowledge of the breach or violation.”  ERISA § 413(2) (emphasis added).  The meaning of “actual knowledge” was the point of this case.

Please find the full article on the Jackson Lewis Benefit Law Advisor here.

Years after California legalized recreational use of cannabis, employers continue to struggle with determining their rights and liabilities regarding employees who engage in that activity.

In 2016, a majority of California voters approved Proposition 64, titled “The Control, Regulate and Tax Adult Use of Marijuana Act” (Prop 64). Prop 64 permits adults 21 years of age and over to possess and grow specified amounts of cannabis for recreational use.

That said, Prop 64 did not address the myriad implications of allowing recreational use of cannabis, including employers’ rights and obligations to employees who choose to engage in that activity. Further confusing the issue has been employees who use marijuana to treat an illness pursuant to the Compassionate Use Act of 1996.

Recently, Assemblymen Rob Bonta introduced Assembly Bill 2355, titled “Employment discrimination: medical cannabis” (AB2355). The bill seeks to make it an unlawful employment practice for an employer to refuse to hire or employ a person, to discharge a person from employment, or to discriminate against an employee, because of the employee’s status as a medicinal cannabis user.

Bonta introduced a similar bill in 2018, which failed. In an apparent effort to secure a different result for AB2355, Bonta has included some exceptions to the proposed protections.

First, employers may still refuse to hire applicants or terminate current employees, if retaining the person would cause the employer to:

  • Lose a monetary or licensing-related benefit; or
  • Incur damages under federal law or regulations, including the Department of Transportation regulations.

Further, if the employer requires all employees and job applicants to be drug and alcohol-free for legitimate safety reasons as required by federal or state laws, the employer will not be subject to the requirements of AB2355.

The bill also specifically provides that employers would still have a right to refuse accommodation, suspend an employee, or take any other lawful action if the employer discovers the employee is using or impaired by medical cannabis at work or during working hours.

With these more specific carve-outs, AB2355 may have a higher likelihood of success than Bonta’s prior attempt at legislating this issue.

Even if the bill does not pass, employers should ensure they are complying with other requirements of California law that pertain to employee drug testing and disability accommodation.

If you have questions about cannabis and the workplace, consider contacting a Jackson Lewis attorney to discuss.

As the #metoo movement strengthened in 2018, the State of California worked quickly to enact legislation requiring harassment prevention training, not just for supervisors, but for all employees. At the same time, California attempted to address the unique issues facing hotel workers, particularly housekeeping staff, through legislation that would have required hotel employers to provide their employees with “panic buttons” – portable devices that employees can quickly and easily activate to summon help if they are harassed or threatened. However, that legislation failed to pass.

Taking up this charge, an increasing number of cities and counties within California have enacted local ordinances that impose similar requirements on hotel employers, including “panic buttons.” The County of Sacramento passed such an ordinance in early 2018, but that ordinance did not include hotels within city limits. The City of Sacramento recently enacted its own hotel worker protection ordinance on January 14, 2020.

The cities of Oakland, Long Beach, and Santa Monica have also enacted ordinances requiring hotel employers to provide employees with “panic buttons” and other protections.

Oakland passed its ordinance, known as “Measure Z,” in late 2018.  That ordinance requires hotel employers to provide panic buttons to their employees. Employers are also required to post notices in hotel rooms informing patrons that harassment is prohibited and that employees have panic buttons.  Not satisfied with simply addressing those issues, Oakland’s ordinance also provides for a specific minimum wage, limits the square footage an employee can be required to service and creates an entirely new city department.

Santa Monica’s ordinance, portions of which went into effect January 1, 2020, requires both panic buttons and posted notices. Santa Monica’s statute also included a mandate for training employees regarding safety, public health protection, prevention of human trafficking, domestic violence, and sexual violence. The training requirements under the Santa Monica ordinance go into effect on January 1, 2021.

Not surprisingly, several of these ordinances have faced legal challenges. Hotel employers and trade associations have sought injunctions. So far, those challenges have encountered very little success. For example, a hotel trade association filed a lawsuit in federal court in late 2019, seeking an injunction barring enforcement of the Santa Monica ordinance. However, on December 18, 2019, the court declined to issue an injunction.

Sacramento’s hotel worker protection ordinance goes into effect on July 14, 2020.

If you have questions on how to comply with local employment ordinances contact a Jackson Lewis attorney.

The State of California has filed a notice of appeal of the district court’s decision granting a preliminary injunction enjoining the State from enforcing Assembly Bill 51 (AB 51) against employment arbitration agreements governed by the Federal Arbitration Act (FAA).

Please find the full article on the Jackson Lewis Publications page here.

February is the month where romance blossoms – which means it is a great time for employers to review their policies regarding employee fraternization and intracompany relationships.

How does an employer go about regulating romantic relationships between employees? It can be tricky. When creating workplace policies, employers should keep Labor Code section 96(k) in mind. Labor Code section 96(k) provides that the California Labor Commissioner may assert claims on behalf of employees for loss of wages that may occur as the result of demotion, suspension, or discharge from employment for lawful conduct occurring during nonworking hours away from the employer’s premises.

How is an employer able to enforce its fraternization and relationship policies without risking liability? Good thing for employers, there are limitations on what claims can be brought under section 96(k). To bring a claim under section 96(k), an employee needs to show that a constitutional right was violated, which does not usually include an office romance. Moreover, California courts have held that employers are permitted to prohibit certain types of workplace dating relationships, either because they could affect morale or cause security risks. Similarly, California permits policies that require a supervisor to bring a consensual relationship with an employee to management’s attention in order to ensure there is no unfair or preferential treatment.

Employers may also want to revisit their blanket policies against fraternization that put complete bans on intracompany dating. Such policies often call for an employee to leave the company if the policy is violated. While this may be necessary depending on the industry or size of the company, enforcement of such policies may prove to be difficult. It is unlikely employees will be forthcoming with relationships if doing so means losing their jobs. A different approach may be to establish a middle ground policy that sets reasonable limitations, expectations, and disclosure requirements on intracompany romantic relationships.

Setting aside the substance of such policies, employers should endeavor to apply them uniformly and consistently, to avoid the appearance of giving preferential treatment to certain employees or relationships based on protected characteristics.

Employers should also consider providing their employees with further guidance on how to handle office romances in state-mandated harassment prevention training. Such training often covers topics such as appropriate work contact and conversation.

If you would like your fraternization policies reviewed or have questions about handling employee relationships, reach out to a Jackson Lewis attorney to discuss. Jackson Lewis also provides California compliant harassment prevention training.

Assembly Bill 5 (“AB 5”), feared by some to be the death of independent contractor relationships in California, faces a growing number of lawsuits.  Organizations representing three industries have filed lawsuits challenging the bill on constitutional grounds.  In each lawsuit, the plaintiffs have sought a preliminary injunction to stay enforcement of the bill until the trial court makes a final decision.  These efforts have met with mixed success.

Legal Challenges

AB 5 is already facing three major lawsuits.  Challengers will likely file additional lawsuits in the coming months.

On October 25, 2018, the California Trucking Association (“CTA”) filed suit in the US District Court for the Southern District of California.  CTA alleges AB 5 is preempted by the Federal Aviation Administration Authorization Act of 1994 (“FAAAA”).  On December 24, 2019, CTA filed a motion for a temporary restraining order against enforcement of AB 5 as to any motor carrier operating in California.  The court granted the motion on December 31, 2019.  The state has appealed the ruling.

The American Society of Journalists and Authors (“ASJA”) filed a lawsuit on December 17, 2019, in the US District Court for the Central District of California.  The suit challenges the application of AB 5 to journalists and authors on various constitutional grounds.  On December 31, 2019, ASJA filed an ex-parte application for a temporary restraining order barring enforcement of AB 5 pending the outcome of the case.  The court denied the ex-parte application (without prejudice) and set the issue for a formal motion, with a hearing date of March 9, 2020.

Contractors working with various gig economy leaders filed suit on December 30, 2019, also in the Central District of California.  The plaintiffs allege AB 5 violates ten provisions of the United States and California-State constitutions.  On January 8, 2020, the plaintiffs filed a motion for a preliminary injunction.  The court denied the motion on February 10, 2020.

Legislation

Less than two months into the legislative session, legislators are already moving forward with at least eight bills related to AB 5.  Most of these efforts are calculated to amend AB 5 to alleviate the damage it will cause to specific industries and occupations.  These bills include:

  • AB 1850 (Gonzalez). At present, this bill simply declares “the intent of the Legislature to enact legislation that would further clarify the application of the California Supreme Court’s decision in Dynamex and recently-enacted requirements under the Labor Code.”  However, Assemblymember Gonzalez will very likely amend the bill during the coming months.
  • AB 1925 (Obernolte) would amend Labor Code section 2750.3 (“section 2750.3”) to add an exemption to AB 5 for small businesses.
  • AB 1928 (Kiley / Melendez) would repeal AB 5 entirely and codify the Borello test for all purposes.
  • SB 806 (Grove) would make various minor revisions to section 2750.3. Currently, none of those revisions are substantive.  However, this bill will likely be amended to include substantive provisions.
  • SB 867 (Bates) would amend section 2750.3(b)(7)(B) to eliminate the sunset date (1/1/21) on the exemption for newspaper carriers.
  • SB 868 (Bates) Amends section 2750.3(c)(2)(B)(x) to remove the 35-submission limit from the existing exemption for freelance writers, editors, or newspaper cartoonists.
  • SB 875 (Jones) would amend section 2750.3(c)(2)(B) to add an exemption for interpreters and translators.
  • SB 881 (Jones) would amend section 2750.3(c)(2)(B) to add an exemption for “A person providing services as a musician or music industry professional, except where a collective bargaining agreement applies.”

Additional bills will be forthcoming during the legislative session.

While some attempts to fight against AB 5 seem more promising than others, it is only the start of the year. Jackson Lewis will continue to monitor the litigation and legislation pertaining to AB 5. If you have questions about AB 5 and independent contractors contact a Jackson Lewis attorney.

On January 31, 2020, the district court in Chamber of Commerce of the United States, et al. v. Becerra, et al., E.D. Cal. Case No. 2:19-cv-2456, granted the request for a preliminary injunction enjoining the State of California (the State) from enforcing Assembly Bill 51 (AB 51) against arbitration agreements governed by the Federal Arbitration Act (FAA). A week later, on February 7, 2020, the court issued its written order detailing the court’s reasoning for granting the preliminary injunction.

The two threshold questions the court had to address was whether the federal court had subject matter jurisdiction over the dispute and whether the plaintiffs had standing to bring their lawsuit. The court answered in the affirmative to both. With respect to subject matter jurisdiction, the court concluded that 28 U.S.C. § 1331 gives it subject matter jurisdiction over federal preemption claims seeking injunctive and declaratory relief. As for standing, the court concluded that the plaintiffs, who are organizations representing various trade groups, sufficiently established organizational standing by alleging and presenting declarations that at least some of their members enter mandatory arbitration agreements and thus face harm if AB 51 is allowed to go into effect.

Next, the court tackled the requirements for a preliminary injunction, including: (1) the likelihood of the plaintiffs succeeding on the merits of the case; (2) the likelihood of irreparable harm to the plaintiffs absent a preliminary injunction; (3) the balance of the equities; and (4) whether an injunction is in the public interest:

  • Likelihood of Success: The court held that the plaintiffs showed they were likely to succeed on the merits because AB 51 (1) puts arbitration agreements on an unequal footing with other contracts in violation of the FAA by targeting arbitration agreements and imposing a higher consent requirement on them; and (2) interferes with the FAA’s goal of promoting arbitration by threatening civil and criminal penalties against employers who seek to enter into arbitration agreements.
  • Irreparable Harm: The court agreed that employers are harmed if they do, harmed if they don’t absent a preliminary injunction: if an employer complies with AB 51, it is deprived of its federal rights to enter arbitration agreements under the FAA; if an employer does not comply with AB 51, it may be subject to civil and criminal penalties.
  • Balance of the Equities and Public Interest: The court concluded that the balance of the equities and the public interest favored a preliminary injunction because ensuring the supremacy of federal laws is of “paramount” importance.

Finally, the court addressed the scope of the preliminary injunction. The preliminary injunction enjoins the State from enforcing all key provisions of AB 51 as it relates to arbitration agreements governed by the FAA. This includes a halt to any enforcement of Labor Code section 432.6(a)-(c) and California Government Code section 12953. The preliminary injunction will remain in place until the court decides the case on the full merits.

While the court’s early emphasis that the FAA preempts state laws that frustrate the execution and formation of arbitration agreements should be welcomed by employers seeking to use mandatory arbitration agreements, the ultimate outcome is still to be decided. Jackson Lewis attorneys will continue to monitor developments pertaining to AB 51. In the meantime, employers should contact a Jackson Lewis attorney if they would like to discuss the implications of the latest ruling or for assistance in drafting California-compliant employment arbitration agreements.

For more on the Chamber of Commerce case and Assembly Bill 51 see Jackson Lewis’ prior articles:

Court Hears Oral Argument on Challenges to AB 51, Orders Further Briefing, and Maintains Temporary Restraining Order

U.S. Chamber of Commerce Files Suit to Halt AB 51

California Bar on Mandatory Arbitration Agreements in Employment Temporarily Enjoined

New California Law Attacks Mandatory Arbitration Again … But Is It More Bark Than Bite?

As California employers continue to grapple with recent legislation effective January 1, California Governor Gavin Newsom is releasing his plans for even more employment legislation. Along with the Governor’s proposed budget, the Governor has announced various “trailer bills.”  Trailer bills are measures that accompany the annual state budget that theoretically are necessary to implement the budget. Yet they can also be an easy way for the Governor to get difficult legislation passed, as the trailer bills only require a simple majority to pass.

Please find the rest of this article on our Disability, Leave & Health Management Blog here.

The district court in Chamber of Commerce of the United States, et al. v. Becerra, et al., E.D. Cal. Case No. 2:19-cv-2456, granted the request for a preliminary injunction enjoining the State of California from enforcing Assembly Bill 51 (AB 51) with respect to arbitration agreements governed by the Federal Arbitration Act (FAA).

AB 51 generally prohibits conditioning employment or employment-related benefits on the signing of an arbitration agreement covering claims under the California Fair Employment and Housing Act or Labor Code. The U.S. Chamber of Commerce and other business organizations filed this lawsuit against the State of California seeking to have AB 51 declared preempted by the FAA. The preliminary injunction issued today will remain in place until the case is resolved on the merits.

In its minute order granting the preliminary injunction, the court indicated that it will issue a detailed, written order explaining its reasoning “in the coming days.”

Jackson Lewis attorneys will continue to monitor developments pertaining to AB 51. In the meantime, employers should contact a Jackson Lewis attorney if they would like to discuss the implications of the latest ruling or for assistance in drafting California-compliant employment arbitration agreements.

For more on the Chamber of Commerce case and Assembly Bill 51 see Jackson Lewis’s prior articles:

Court Hears Oral Argument on Challenges to AB 51, Orders Further Briefing, and Maintains Temporary Restraining Order

California Bar on Mandatory Arbitration Agreements in Employment Temporarily Enjoined

New California Law Attacks Mandatory Arbitration Again … But Is It More Bark Than Bite?