Employers must carefully draft arbitration agreements and ensure the agreements are regularly updated for compliance with state and federal law. A California Court of Appeal held that owner-operator truck drivers were not required to arbitrate whether they were misclassified as independent contractors where the parties’ arbitration agreements applied to any dispute that arose “with regard to its application or interpretation.” Elijahjuan v. Superior Court, No. B234794 (Cal. Ct. App. Oct. 17, 2012).  The Court found that the misclassification claims fell outside the arbitration provision because it did not concern the application or interpretation of the Agreements; rather, the drivers sought to enforce their rights under the California Labor Code.  

The Court’s decision reiterates California’s hostility toward enforcing arbitration agreements and reminds employers that they need to make clear that all claims regarding the parties’ relationship are covered by the arbitration agreement. In light of this ever-changing legal climate, employers should continue to consult with their legal counsel when reviewing the enforceability of arbitration agreements. For a detailed discussion regarding this case, please see our article by clicking here

 

Another arbitration case which is unfavorable to employers. A California Court of Appeal ruled that a human resources director who never signed the employer’s arbitration agreement, concealed that fact from her employer, and quit her job before doing so, could not be required to arbitrate her employment claims. Gorlach v. The Sports Club, No. B 233672 (Cal. Ct. App. Oct. 16, 2012). The Court rejected the employer’s equitable estoppel and implied contract theories and affirmed the denial of the employer’s motion to compel arbitration.

This case illustrates a pitfall for the unwary employer implementing an arbitration program. If an employer intends to require employees to sign an arbitration agreement as a condition of employment or continued employment, the employer needs to obtain a signed agreement. In addition, the employer should develop a system to audit that those signatures are obtained, including the signatures of members of management. There are also numerous other potential pitfalls with arbitration agreements so we suggest working with legal counsel prior to moving forward.

 Written by: Joseph Lazzarotti

Late last week, California Governor Jerry Brown "took to Twitter, Facebook, Google+, LinkedIn and MySpace to announce that he has signed two bills that increase privacy protections for social media users in California."

As discussed, one of the bills, A.B. 1844, updates California’s Labor Code to significantly limit when employers could ask employees and job applicants for social media passwords and account information. However, the law permit employers to request an employee to divulge personal social media activity reasonably believed to be relevant to an investigation of allegations of employee misconduct or employee violation of applicable laws and regulations. This exception  applies so long as the social media is used solely for purposes of that investigation or a related proceeding.

The other bill, S.B. 1349, establishes a similar privacy policy for postsecondary education students with respect to their use of social media. While the bill prohibits public and private institutions from requiring students, prospective students and student groups to disclose user names, passwords or other information about their use of social media, it stipulates that this prohibition does not affect the institution’s right to investigate or punish student misconduct

The new laws take effect Jan. 1, 2013.

California’s Third Appellate District has held that a violation of Labor Code section 132a cannot support a common law claim of wrongful termination in violation of public policy. In general terms, Labor Code section 132a states an employer may not discriminate against an employee for filing a workers’ compensation claim or for having a work related injury. These kind of claims are adjudicated by the California Workers’ Compensation Appeals Board. In Dutra v. Mercy Medical Center Mount Shasta, (C067169, Sept. 26, 2012), the Court found that Labor Code section 132a does not represent the sort of public policy which provides the basis for a common law wrongful termination in violation of public policy claim in civil court. In so ruling, the Court distinguished an earlier California Supreme Court case, City of Moorpark v. Superior Court, Cal. 4th 1143 (1998). In Moorpark, the Supreme Court acknowledged that Labor Code section 132a is not an exclusive remedy and plaintiffs may pursue parallel common law claims. The Dutra court agreed but held Moorpark did not specify which common law claims were appropriate following a Labor Code section 132a violation. Analyzing the underlying policy of Labor Code section 132a, the Court found that it is not a proper basis for a public policy wrongful termination claim. Accordingly, a plaintiff may not claim she was wrongfully terminated in violation of public policy in civil court merely because her termination allegedly violated Labor Code section 132a. Employers should consult with their legal counsel to determine how the decision may impact their operations, if at all. The case may also be appealed by a party.  

California Governor Jerry Brown has signed into law a bi-partisan measure that seeks to curb rampant, frivolous Americans with Disabilities Act access lawsuits in the state and expand access to businesses for those with disabilities.  This is good news for California businesses.  The state reportedly has 12 percent of the country’s disabled population, but 40 percent of the nation’s ADA lawsuits. For a detailed article on the bill which has many different elements to it, please see our article entitled, "New California Law Targets Frivolous Disability Access Lawsuits."

On August 29, 2012, California passed AB 1875. The Bill adds section 2025.290 to the California Code of Civil Procedure, which limits oral depositions in civil litigation to seven hours or less. However, the new law does not apply to cases brought by employees or applicants arising out of or relating to employment. The new law provides for exceptions where any circumstances or actions unfairly impede or delay the deposition. The law also makes exceptions for expert witness depositions, depositions in complex litigation, and depositions of “persons most qualified.”

 A California Court of Appeal has issued a favorable opinion for employers regarding arbitration agreements. Specifically, the Court held that an employer did not waive its right to enforce an arbitration agreement by waiting to request arbitration until after the U.S. Supreme Court has issued a decision addressing the enforceability of class action waivers in arbitration agreements, the California Court of Appeal has ruled.  Reyes v. Liberman Broadcasting, Inc., No. B235211 (Cal. Ct. App. Aug. 31, 2012).  Significantly, the Court found the employer did not waive its right to arbitration because it had reasonably concluded it could not have enforce the agreement under the then-current state of California law and could have been subjected to class arbitration. For a detailed discussion of the case, please see our article, "Employer Did Not Waive Right to Compel Arbitration by Waiting for U.S. Supreme Court’s Decision on Class Action Waivers to File Its Motions"

 

 

California AB 2396 was recently signed into law which amends existing law governing the employment of minors under 16 years of age in the entertainment industry. Specifically, the amendment addresses the employment of infants under the age of one month on a movie location or set. The bill clarifies that a temporary permit authorizing the infant’s employment will only be issued after the specific requirements of Labor Code § 1308.8 are met. For example, a pediatric physician must provide written certification that the infant is at least 15 days old; he/she must advise that the infant was carried to full term and was of normal weight; and, that the infant is physically capable of handling the stress of filmmaking. We will continue to provide updates regarding new California workplace legislation as finalized by the Governor.

The California Governor signed into law AB 1964 which amends the Fair Employment & Housing Act (“FEHA”) to prohibit discrimination against individuals for the wearing of religious dress or the practice of religious grooming in the workplace. The FEHA already prohibits discrimination against “religious belief” or “observance.” However, the new amendment expressly states that religious dress and grooming practices qualify as a religious belief or observance.

Employers should “reasonably” accommodate religious belief and observance in the workplace. Under the new amendments, employers must provide some form of accommodation for religious dress and grooming unless doing so would be an undue hardship on the employer’s business. California employers should consider reviewing their employee handbooks and procedures to address this new change in the law and keep an eye out for additional legislation over the next couple of months.

A California Court of Appeal has ruled that a non-compete agreement executed as part of a business sale was unenforceable under California law because it was insufficiently related to the sale. Fillpoint, LLC v. Maas, No. G045057 (Cal. Ct. App. Aug 24, 2012). Non-compete agreements are generally unenforceable in California. A limited exception under Business and Professions Code section 16601 recognizes non-compete agreements in connection with the sale of a business. This allows buyers to protect the value of their purchases from the acts by the seller which could diminish that value after the sale.

In Fillpoint, the Court found that the non-compete provisions of an employment agreement were unenforceable even when executed in connection with a stock purchase agreement. Both agreements limited an ex-employee’s ability to compete with the purchaser. However, while the stock purchase agreement only limited some competitive activity and only for three years following the stock purchase, the employment agreement broadly restricted future employment following the employee’s separation from the buyer. The Court found the employment agreement unenforceable because it was too broad and not sufficiently related to the stock purchase. The Court contrasted this with the stock purchase agreement, which was held to be part of the purchaser’s attempt to protect the value of its purchase.

 

This is a reminder that California courts carefully scrutinize non-compete agreements under California law. For a more in-depth discussion of this case, please see our article, Non-Compete Related to Business Sale Not Enforceable, California Court of Appeal Rules